State Bank of Pakistan’s Policy Interest Rate Cut for Fourth Time in Space of Two Months

May 15, 2020

Pakistan’s key central bank rate was at 13.25% as recently as March 16 but now falls to 8.0%, thanks to two reductions in March totaling 225 basis points, a third cut of 200 bps a month ago and a fourth announced today by the Monetary Policy Committee of 100 basis points after an emergency meeting. Inflation prospects have improved due to lower energy costs and a pandemic-driven economic contraction. On-year CPI inflation is projected at 7-9% next fiscal year, and officials ” stand ready to take appropriate actions as the need may arise.” Besides the four interest rate reduction, other central bank measures have been adopted ” to extend principal repayments, provide payroll financing, and other measures to support liquidity.”

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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