SBP says MPC cuts policy rate by 75 bps to 12.50 percent.

 
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KARACHI -- The State Bank of Pakistan (SBP) said Tuesday that at a meeting on 17thMarch 2020, the Monetary Policy Committee (MPC) decided to cut the policy rate by 75 bps to 12.50 percent. The decision reflected the MPC's view that the outlook for inflation has improved in light of the recent deceleration in domestic food prices, significant decline in consumer price expectations, sharp fall in global oil prices, and slowdown in external and domestic demand due to the Coronavirus pandemic. Average headline inflation is expected to remain within the SBP's 11-12 percent forecast in FY20, before falling to the medium-term target range of 5- 7 somewhat earlier than previously forecast, the bank said in a report issued today.

The SBP said 'In addition to its decision on interest rates, the MPC noted that the SBP's new 'Temporary Economic Refinancing Facility (TERF)' for businesses- that provides SBP refinancing for bank lending for plant and machinery for new projects at 7.0 percent fixed for 10 years should provide important additional support to investment in response to the anticipated slowdown in activity due to the Coronavirus pandemic. The MPC emphasized that it stood ready to take further actions if and when needed as more information becomes available on the outlook for inflation and growth. In reaching this decision, the MPC considered key trends and prospects int he real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation. The bank said that the MPC noted that the dominant development since the last meeting on 28th January 2020 has been the outbreak of the Coronavirus, which has taken a significant toll on human life around the world. It said: 'The outbreak has reduced external and domestic demand, while increasing...

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