KARACHI: State Bank of Pakistan (SBP) has kept interest rate at 6.5 per cent in its new monetary policy announced for next two months.
SBP Governor Mahmood Ashraf Wathra unveiled the first bi-monthly monetary policy of the current fiscal year. He announced an improvement in the balance of payments (BoP) position in the second half of fiscal year 2014-15. He said that the deduction in the external current account deficit due to a decline in the import bill and steady growth in workers remittances are the key factors behind the improved external position.”
Pakistan’s consumer inflation was more muted than expected during the last fiscal year. The average consumer price index (CPI) inflation came down to 4.5 percent in the last fiscal year from 8.6 percent in fiscal 2014. The low inflationary trend allowed the central bank to cut the interest rate by an accumulative 300 bps in successive monetary policy announcements from November 2014 onwards.
He said that net State Bank foreign exchange reserves rose over the six-month period from Dec 2014 to June 2015, from $10.5 billion to $13.5b, and predicted a slight increase in net SBP reserves over four months of imports by the end of June 2016.
He said improvements in macroeconomic indicators led SBP to continue with its accommodative monetary policy stance and slash the policy rate by a cumulative 300 bps in FY15.
