Islamabad: The State Bank of Pakistan (SBP) on Thursday announced another policy rate cut of 100 points to 7% – making this the fifth time that the interest rate has been reduced within the last 100 days, according to news sources.
The decision was made in the central bank’s monetary policy committee meeting with a view to improve the national inflation outlook – while the domestic economy continues to downslide and poses risks to the growth rate increase. The policy rate cut was prompted by the economic issues caused by the escalating coronavirus situation in the country. The total reduction has now reached 625 basis points.
Moreover, the official SBP statement read that risks to the global economic outlook are skewed to the downside with no recovery path being certain. The World Economic Outlook (WEO) released yesterday that the International Monetary Fund (IMF) has degraded its global growth further to 4.9 – with a more gradual recovery.
The SBP meeting observed that the economy will recover more slowly as the lockdown restrictions are lifted in the next fiscal year – heavily depending on the pandemic situation prevailing both nationally and globally.
Furthermore, the committee noted that the SBP has increased initiatives’ take-up like health sector support, concessional refinancing facilities to prevent layoffs and regulatory measures to provide debt servicing relief.
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