The State Bank of Pakistan (SBP) has announced its monetary policy, on Monday. According to details, SBPS’s Monetary Policy Committee (MPC) met today in Karachi. The meeting was chaired by Governer SBP Dr Reza Baqir.
In a statement issued by the SBP it was declared that the committee has decided to keep the policy rate unchanged at 7 percent.
According to the SBP:
- Business confidence and the outlook for growth have improved since the MPC's last meeting in June, 2020 mainly due to the decline in Covid-19 cases in Pakistan and the easing of lockdowns, as well as the timely stimulus provided by the Government and SBP.
- The forecast for inflation has risen slightly, primarily due to recent supply side shocks to food prices. Average inflation is now expected to fall within the previously announced range of 7 –9 percent during FY21, rather than marginally below.
Earlier today, the SBP had announced that Dr Reza Baqir will announce the decision today at 5pm and SBP will tweet the decision at the same time.
According to experts, the SBP has cut interest rates by 625 basis points from March to June, but now the base rate is likely to be maintained.
For managing the severe economic situation in the country created after the outbreak of the COVID-19 pandemic, from February this year, the State Bank reduced its policy rate five times to 7 percent from 13.25 percent.
This helped industries and businesses to restart their activities. The policy rate is the primary instrument of monetary policy statements.