SBP slashes policy rate 100 basis points to 7%.

KARACHI -- The State Bank of Pakistan (SBP) has slashed the policy rate once again by another 100 basis points to bring it to 7%, it announced in a statement on Twitter, following a meeting of the Monetary Policy Committee under Governor Dr Reza Baqir.

"This decision reflected the MPC's view that the inflation outlook has improved further, while the domestic economic slowdown continues and downside risks to growth have increased," the central bank said on Twitter, announcing the fifth rate cut in three months since the coronavirus pandemic hit Pakistan.

"Against this backdrop of receding demand-side inflation risks, the priority of monetary policy has appropriately shifted toward supporting growth and employment during these challenging times,' it added, noting that the MPC felt "a prompt response to downside risks to growth" in context of a risk management viewpoint, given the improved inflation outlook.

'The MPC noted that with approximately Rs3.3 trillion worth of loans due to be repriced by early July 2020, this was an opportune moment to take action from a monetary policy transmission perspective,' it added.

It also observed a fear of a second wave of the cooronavirus pandemic hitting the country, that the "risks to the global outlook are heavily skewed to the downside and [that] the path of recovery remains uncertain".

"The MPC also noted that in its update of the World Economic Outlook (WEO) released yesterday, the IMF downgraded its 2020 global growth forecast further to -4.9%, 1.9 percentage points lower than in April, and projected a more gradual recovery than previously anticipated,' the SBP stated.

"Domestically, the moderation of underlying inflation has continued. Notwithstanding a seasonal uptick in food prices associated with the Eid holiday, headline inflation declined further to 8.2 percent in May on the back of the recent cut in...