KARACHI : The State Bank of Pakistan (SBP) has delayed the announcement of its monetary policy for the July-September quarter to August 15 from July 25, a bank spokesman said on Friday.
The State Bank was widely expected to slash its key interest rate by 150 basis points in Saturday's policy review, to 12.5 percent, taking account of falling inflation and the need to help the economy bounce back from recession.
"The monetary policy announcement has been delayed. It will now be announced on August 15," said Syed Wasimuddin, chief spokesman for the State Bank of Pakistan.
He gave no reason for the postponement.
Markets responded negatively to the delay. The Karachi Stock Exchange's (KSE) benchmark 100-share index was down 0.95 percent by 0631 GMT, after trading slightly in positive territory before the news was released.
But analysts said the decision was not necessarily a bad thing for markets in the long run.
"The immediate reaction in the stock market will be negative. But delaying the announcement will give the SBP time to look at the July data as well, and further evidence of declining inflation may result in a bigger rate cut," said Asif Qureshi, director of Invisor Securities in Karachi.
By that time the International Monetary Fund (IMF) would also have decided on whether to grant Pakistan the roughly $850 million third tranche of its $7.6 billion emergency loan, giving the State Bank more clarity on how to proceed, Qureshi said.
The country has also requested about $4 billion in additional financing from the IMF as "insurance" against the economic crisis.
The yield on the benchmark 10-year Pakistan Investment Bond eased marginally after the announcement, to 11.55 percent, dealers said.
"There was a fall of 5-10 basis points in the yield, but there is nothing to panic about, as delaying the announcement will result in further clarity for the State Bank, which is good for the market," said a dealer at a major local bank.
The discount rate is now at 14 percent, after the SBP cut it by 100 basis points in its quarterly review in April.
Copyright Reuters, 2009
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