Pakistan's central bank kept its key interest rate unchanged at 22%, announcing the outcome of a policy review in a statement on Thursday that surprised analysts who were expecting an increase of at least 150 basis points.

The bank said in the statement that inflation was likely to increase "significantly" in September, but it expected inflation to then decline in October and maintain a downward trajectory from then.

The bank noted that the 27.4% annual CPI inflation recorded in August had a lower decline, from 28.3% the previous month, than anticipated due to a surge in global oil prices.

Battling rising inflation and dwindling foreign exchange reserves, the crisis-ridden South Asian nation is trying to navigate a path to economic recovery under a caretaker government in the wake of a critical $3 billion IMF loan programme, approved in July.

Reforms under the programme have complicated the task of keeping price pressures in check and protecting an already weak rupee from further declines, with the country passing through a political and economic crisis.

The State Bank of Pakistan's monetary policy committee kept the key interest rate unchanged when it last met in July, having earlier raised it by 12.25 percentage points to 22% since April 2022.

(Reporting by Ariba Shahid in Karachi; editing by Sudipto Ganguly and Sharon Singleton)