The SBP kept its benchmark interest rate, the discount rate, on hold in March, owing to a diminishment of "immediate risks to macroeconomic stability". However, the rate of year-on-year consumer price inflation has been in double digits every month bar one since January 2008, and Pakistan will continue to rely on monetary policy to tackle high inflation, despite evidence that supply-side problems (such as the hoarding of foodstuffs and the destruction of crop land and grain-storage facilities in the floods), as well as the government's reliance on the SBP for deficit financing, are more important than strong domestic demand in pushing up prices. The central bank noted explicitly that it expects risks to macroeconomic stability to increase again in 2011/12, and so we expect monetary policy to be tightened again in the second half of 2011. Assuming that inflation moderates in the second half of 2011 and remains relatively subdued in 2012-15, we believe that the SBP will then be keen to reduce interest rates again to spur economic growth.