State Bank of Pakistan announces a reduction in Interest rate. The State Bank of Pakistan has issued a monetary policy under which it has been decided to reduce the interest rate by another 100 basis points one percent.
According to news details, the interest rate has come down to 8% after a 1% reduction. In the last two months, the interest rate has been reduced to 5.25%.
According to the SBP, inflation is likely to be 11 to 12 percent this year and 7 percent to 9 percent next fiscal. A statement issued by the SBP said that tax revenue declined sharply by 15% in March and April.
According to the central bank, the country is facing a major challenge due to corona. A reduction in interest rate will not end the economic slowdown but will solve the problem of shortage of money.
The deficit is expected to widen in the fourth quarter of the current financial year. Despite the challenges, the current account deficit is likely to remain under control.
It may be recalled that the SBP has reduced the interest rate by 425 basis points from March 17 to April 16 and twice by holding an emergency meeting, the March interest rate has been reduced by 75 basis points to 12.50%.
On March 24, the Monetary Policy Committee announced a further reduction of 150 basis points in interest rates, while on April 16 the interest rate was further reduced by 200 basis points to 9%. The FPCCI had demanded a reduction of 400 basis points in interest rates.
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