KARACHI: The State Bank of Pakistan (SBP) on Thursday slashed its key interest rate by one per cent (100 basis points) to seven per cent in view of improved inflation outlook and domestic economic slowdown.
The decision to cut the policy rate was taken at a meeting of the Monetary Policy Committee (MPC).
The central bank in a statement issued after the meeting said the decision reflected the MPC’s view that the inflation outlook has improved further, while the domestic economic slowdown continues and downside risks to growth have increased.
“Against this backdrop of receding demand-side inflation risks, the priority of monetary policy has appropriately shifted toward supporting growth and employment during these challenging times,” the statement read.
MPC re-asserted its commitment to supporting households and businesses through the Covid-19 crisis and minimising damage to the economy
Consistent with its mandate, the State Bank said, the MPC re-asserted its commitment to supporting households and businesses through the Covid-19 crisis and minimising damage to the economy.
In addition, the MPC noted that with approximately Rs 3.3 trillion worth of loans due to be repriced by early July 2020, this was an opportune moment to take action from a monetary policy transmission perspective.
In this way, the benefits of interest rate reductions would be passed on in a timely manner to households and businesses, the statement said.