KARACHI: The State Bank of Pakistan (SBP) on Monday has announced to maintain the policy rate at seven percent in its new monetary policy.
According to a press release, the central bank noted that the business confidence and the growth outlook in the country had improved since the last meeting of the Monetary Policy Committee (MPC).
“This reflects the decline in COVID-19 cases in Pakistan and the easing of lockdowns, as well as the timely stimulus provided by the Government and SBP. At the same time, the forecast for inflation has risen slightly, primarily due to recent supply side shocks to food prices,” it added.
The central bank further noted that the average inflation was expected to decline to 7-9 percent for the Fiscal Year 2021 rather than marginally below.
It also credited the measures taken by the SBP during the pandemic led to significant liquidity and further lowered funding costs for businesses and households.
“Together, these monetary measures have injected an estimated stimulus of Rs. 1.58 trillion, or about 3.8 percent of GDP, in the cash flow of businesses and households,” it added.
The meeting pointed out that the country’s manufacturing sector had expanded by 5 percent after the slump in March and April due to the coronavirus lockdowns. “Not all the industries witnessed a similar growth, and economic activity generally still remains below pre-corona levels,” the statement said.
The committee, in its last meeting, had reduced interest rates by 625 basis points to 7% between March and June to support the economic growth in response to COVID-19 challenges.
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