SBP to Announce Monetary Policy for Next Quarter today

The monetary policy for third-quarter of the current fiscal year is being announced today, while the economists are divided on whether Pakistan will lower interest rates for the first time since 2002 to stoke growth, as price gains remain “stubbornly” high.

Stock market brokers, traders and industrialists all alike anxiously waiting as to whether the State bank of Pakistan (SBP) cuts the interest rate or not in its third-quarter monetary policy being announced here today. The analysts expecting a cut said that the private sector loans have dropped down seven times below Rs50 billion, while large-scale industrial production has fallen to minus 5.37, which was pacing up unemployment and the economic growth rate was feared to remain at 2.5 percent.

Senior bankers said that the interest rate constitute the miniscule part of any company’s trading. They said that the government would also have to address the energy crisis besides SBP monetary policy correlating with other policies. Economists also accept that following the entrance into IMF program, its approval on policy decisions was necessary.

It may be recalled that monetary policy is not made keeping in view the inflation and price-hike rates only. Lower interest rate would induce buying on taking loans and because of the low production capacity, the demand pressure would be met by imports, which would result in depletion of foreign exchange reserves, weakening of rupee value and widening trade deficit gap.

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