KARACHI: The State Bank of Pakistan’s Monetary Policy Committee will meet on Friday (May 15) in Karachi to decide the country’s monetary policy.
The central bank is expected to issue the Monetary Policy Statement through a press release on the same day. This would mark the fourth monetary policy announcement since January 2020.
The monetary policy decision comes at a time of increased concern regarding the impact of the Covid-19 coronavirus outbreak on Pakistan’s economy.
The State Bank had previously slashed the policy rate by 425 basis points in March and April, from 13.25pc to 9pc.
It had cut the policy rate by 75 basis points from 13.25pc to 12.5pc on March 17, by a further 150 basis points to 11pc on March 24, and by 200 basis points to 9pc on April 16.
In the last monetary policy statement on April 16, the State Bank had said Pakistan’s economy is expected to contract by 1.5pc in fiscal year 2020, before recovering to around 2pc growth in fiscal year 2021. Inflation was also expected to be closer to the lower end of the previously announced 11-12pc range this fiscal year, and to fall to 7-9pc range next fiscal year.
After the previous interest rate cuts of March and April were announced, many analysts were pleased that the SBP had taken adequate measures to lower the policy rate and boost demand.
However, some have felt that the SBP is in a position to reduce the policy cut even further in light of the global pandemic, and in light of decreasing inflation. The inflation rate in April was recorded at 8.5pc, from 10.24pc in March and 12.4pc in February.
The SBP had last raised the policy rate on July 16, 2019, to 13.25pc with a rise of 100 basis points. At the time, it cited increased potential inflation owing to a rise in utility costs.
The central bank kept the policy rate unchanged in its reviews on September 16 and November 2 in 2019, and again on January 28 in 2020, until finally decreasing it in February.