KARACHI: The downward revision in the interest rate by 50 basis points is likely as the State Bank of Pakistan (SBP) is going to announce the bi-monthly monetary policy on May 23.
The SBP believes that the average inflation will remain between 4-5pc at the end of this fiscal year as the Consumer Price Index (CPI) inflation has already moved to record low. The falling CPI (4.8pc for July-April) created room for policymakers to cut the interest rate by another 50bps in the upcoming monetary policy review. Since November 2014, the SBP cut its policy rate thrice to 8 per cent. The CPI inflation clocked in at 2.1pc in April 2015 after a lapse of 12 years mainly to sharp drop in oil prices and lower food inflation.
The government rightly takes the credit of bringing the inflation down to a decade low, but the impact on investment has yet to emerge.
