The State Bank of Pakistan will announce its bi-monthly monetary policy today.
According to the details, the Monetary Policy Committee (MCP) will meet under the chairmanship of the Governor State Bank. Governor SBP Raza Baqir will announce the new interest rate in a press conference.
At present, the policy rate is 7 percent. Today’s monetary policy will announce the interest rate for the next 2 months.
The central bank has been slashing interest rates due to the economic slowdown caused by the global coronavirus and the slowdown in economic growth.
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.
From 13 to 7
In January 2020, the interest rate was 13.2%. The Monetary Policy Committee, in its March 17 meeting, had decided to reduce the policy rate by 75 basis points, after which the interest rate was reduced from 13.25% to 12.50%.
One week later, on March 24, 2020, an emergency meeting of the MPC was convened to review the economic impact of the coronavirus epidemic.
The meeting decided to further reduce the interest rate by 1.50% after which the interest rate was reduced to 11%.
Later, on April 16, 2020, at the MPC meeting, the basis points were further reduced by 200, which reduced the interest rate to 9%.
Announcing its monetary policy on May 15, the SBP cut interest rates by another 100 basis points to 8%.
The SBP announced a new monetary policy on June 25, reducing interest rates by another 100 basis points to 7%.
State Bank of Pakistan released the 3rd Quarterly Report for the year 2019-20. According to the report released by the SBP, inflation will remain at 7-9% this financial year.
The report also said that the inflation rate in July was higher than expected. The inflation stood at 9.30% in July and it was also pointed out that rising prices of petroleum products have increased inflation.
The SBP said that the rate of inflation in June was 8.6 percent as compared to July this year.
It may be recalled that earlier it was reported that the inflation rate in the country has increased by 2.50% this year as compared to last year.