(Bloomberg) -- Pakistan’s central bank held the key interest rate at a record high for a sixth straight meeting, as a newly-elected government holds loan talks with the International Monetary Fund that wants a tight monetary policy to curb inflation.

The State Bank of Pakistan kept the target rate at 22%, according to a statement on Monday. Thirty of the 37 analysts surveyed by Bloomberg predicted a hold while the rest expected a cut.

The decision comes as a new government led by Prime Minister Shehbaz Sharif seeks a new loan of at least $6 billion from the multilateral lender. An IMF mission visiting Pakistan will conclude talks on Monday for a review of an existing program, which could see the release of the final tranche of $1.1 billion. 

The rate-setters “observed that despite the sharp deceleration in February, the level of inflation remains high and its outlook is susceptible to risks,” the central bank said in a statement on its website. “This warrants a cautious approach and requires continuity of the current monetary stance.”

Most analysts expect the central bank to start its rate cut cycle from the next meeting on April 29 if consumer price gains continue to ease. Pakistan’s inflation pace slowed to 23.06% in February, the lowest in almost two years and exceeding market expectations.

Bond managers are reducing their exposure to Pakistan’s debt after a rally of almost 25% this year, as the nation’s history of policy slippage cast a cloud over negotiations for a new IMF bailout program.

Economists are watching to see if consumer price gains fall below the interest rate next month, which could be a sign for the central bank to start easing. Pakistan’s interest rates are expected to drop by 600 basis points to 16% by the end of the year, according to a median forecast in a Bloomberg survey.

Pakistan remains heavily reliant on IMF aid as the nation faces $24.3 billion in external financing needs in the fiscal year starting July, about three times its foreign exchange reserves. It needs to make a payment of about $1 billion for dollar bonds maturing in April. 

The nation will easily repay a total of $3.5 billion of foreign debt due by June-end, State Bank of Pakistan Governor Jameel Ahmad said in an analyst briefing. Another $6 billion is expected to be rolled over, said Ahmad.

The rupee may come under pressure after nearly six months of stability due to the debt repayments, according to a report by Intermarket Securities Ltd. last week. Any delay in a new IMF agreement could lead to a ramp up in speculation in the currency market, the brokerage said. 

(Updates with bond managers cutting exposure in sixth paragraph. A previous version of this story corrected the debt payment figure.)

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