State Bank of Pakistan cuts policy rate to 10.5%

The policy rate was cut by 150 basis points.


Farhan Zaheer August 10, 2012

KARACHI: Beating the market expectations, the State Bank of Pakistan (SBP) on Friday cut the policy rate by 150 basis points to 10.5 per cent.

While revealing the monetary policy, Governor SBP Yaseen Anwar said that the central bank wants to give stimulus to the economic growth without losing its focus from the persistent inflation in the country.

The move will be appreciated by businesses, as it will provide some relief to the private sector that has been perturbed by power crisis, security issues and political instability. The cut in policy rate is line with the demand of business community to bring the interest rates to single digits.

The decision of the central bank came after a fall in inflation. The monthly inflation in July 2012 came down to 9.6 percent, which was 12.3 percent in May 2012.

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COMMENTS (18)

Syed Shah | 8 years ago | Reply

@Muhammad Ali: This is a very welcome development. As a matter of fact it should be not more than 8 to 9%. That stimulates growth. But SBP must ensure effective monitoring of private banks. They are fleecing the borrower and give almost nothing to the depositor. The worst cases are of so called Islamic Banking facades. If conventional banking is theft Islamic Banking is dacoity. With proper regulation from SBP we can ensure that businessmen do not take undue advantage of a deflationery measure. It does not increase inflation as you are suggesting on the contrary it will spur growth if rightly regulated.

Jojo | 8 years ago | Reply

This will not have any impact in stimulating the economy as people like dream, only speculative markets like kse might do a small bull run.

Inflatuon in pakistan is more of a cost full phenomenon rather then money printing one, currently Banks hoard money so botnmuch is making out in the system. They rather prefer to invest the money in goverment bonds as they too consider the financial and political, economic climate uncertain and don't loan out to small and medium enterprises/businesses which bsically are key economic stimulators and job creators.

This decrease would be short lives and will only serve the goverment as it is the major borrower fromt the comercial banks these days.

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