State Bank of Pakistan leaves interest rate unchanged at 7%

by index360

KARACHI: The State Bank of Pakistan (SBP) kept the interest rate unchanged at 7% for the next two months.

The decision taken by the SBP Monetary Policy Committee (MPC) on Monday comes as the country is reeling from the effects of the Covid-19 pandemic.

Traditionally, the SBP revises its policy rate up or down, or keeps it unchanged in relation to the inflation reading and economic activities.

Low inflation mainly leads to a reduction in the policy rate for ramping up economic activities and vice versa. The rate is left unchanged at a higher level to tame inflation or on the lower side to support economic growth.

However, the world is quite different today where the pandemic is dominating decision-making in all walks of life and everything else has become less important.

In addition to this, Pakistan has invited the International Monetary Fund (IMF) to complete its second review of the country’s economy under the $6 billion loan programme, which has been on hold since the Covid-19 outbreak in Pakistan in February. The Fund has asked Islamabad to meet loan conditions including hike in power tariff, additional measures for increase in tax collection and making the central bank autonomous.

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