Monetary policy takes everyone by surprise
Drop in key policy rate not expected to have any impact.
KARACHI:
The monetary policy took everyone by surprise as industrialists and analysts did not expect the key policy rate to be cut down.
The State Bank of Pakistan on Saturday announced to cut key policy rate by 50 basis points to 13.5 per cent.
The step, an unexpected one, is a positive step for the country as this is first drop in more than a year, said BMA Capital research head Hammad Aslam.
The trend is expected to continue and we might see the discount rate ease to 11 per cent by the end of the financial year, added Aslam. However, Aslam was of the view that the decision will shock the market as it was a surprise, he said. Pakistan’s central bank does not reveal policies before the announcement, a practice rarely seen anywhere else in the world.
The decision was against market expectation as all eleven analysts polled by The Express Tribune on Thursday forecast that the central bank’s will leave the discount rate unchanged at 14 per cent.
Karachi Chamber of Commerce and Industry president Saeed Shafiq was of the view that such a meagre drop will make no difference as the rate is still one of the highest in the world. They should have been reduced by three or four per cent, said Shafiq.
Published in The Express Tribune, July 31st, 2011.
The monetary policy took everyone by surprise as industrialists and analysts did not expect the key policy rate to be cut down.
The State Bank of Pakistan on Saturday announced to cut key policy rate by 50 basis points to 13.5 per cent.
The step, an unexpected one, is a positive step for the country as this is first drop in more than a year, said BMA Capital research head Hammad Aslam.
The trend is expected to continue and we might see the discount rate ease to 11 per cent by the end of the financial year, added Aslam. However, Aslam was of the view that the decision will shock the market as it was a surprise, he said. Pakistan’s central bank does not reveal policies before the announcement, a practice rarely seen anywhere else in the world.
The decision was against market expectation as all eleven analysts polled by The Express Tribune on Thursday forecast that the central bank’s will leave the discount rate unchanged at 14 per cent.
Karachi Chamber of Commerce and Industry president Saeed Shafiq was of the view that such a meagre drop will make no difference as the rate is still one of the highest in the world. They should have been reduced by three or four per cent, said Shafiq.
Published in The Express Tribune, July 31st, 2011.