Inflation control is SBP’s role: experts

Say central bank did not use all tools while framing monetary policy


Our Correspondent November 12, 2021
A Reuters file image of SBP logo

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LAHORE:

Experts have agreed that controlling inflation is the sole responsibility of the State Bank of Pakistan (SBP) and the blame is wrongly passed on to the government.

Speaking at the Lahore Economic Journalists Association on Thursday, Sustainable Development Policy Institute (SDPI) research fellow Sajid Ameen Javed was of the view that the central bank did not use all the tools available at its disposal to frame the monetary policy.

Citing a research, he underlined that the SBP was mostly focusing on interest rate adjustments.

The interest rate when increased benefited the savers and the rich, whereas it adversely impacted purchasing power of the poor, he added.

He emphasised that the central bank should consider implications of its monetary policy for income and consumption inequality, without deviating from its basic role of managing inflation.

Read No breakthrough with IMF on SBP autonomy issue

“The public should be taken into confidence,” he said, adding that the central bank should explain the reasons for changes in the monetary policy.

“Views of each member of the monetary policy board should be disclosed every time a policy is announced,” Javed suggested.

He added that the move would bring transparency to the system as every member would give reasons for taking a particular stance.

“This system is in vogue in India and many developed economies,” he said.

Published in The Express Tribune, November 12th, 2021.

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COMMENTS (1)

Mohsin Alim Qazi | 2 years ago | Reply Seriously Keeping the interest rate low is favorite ploy of rich which allows them to get underpriced capital from small investor. This is always done by citing that lower interest rates spurn growth and politicians are more than willing to accept such narrow view of interest rates. Negative real interest rates have been a key implement in disprportionately transferring the wealth to rich not the other way round
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