KARACHI, (SANA) : Governor State Bank (SBP) of Pakistan, Yaseen Anwar on Friday said that the central bank has decided to cut key interest rate by 150 bps to 10.50 percent which would be effective from Monday.
He said while unveiling the monetary policy statement at a press conference here on Friday, that the country’s economy is still facing severe macro economic challenges.
He said that inflation in July was recorded at 9.6 percent but the full-year inflation is likely to stay higher in the 10 to 11 percent range by the end of current fiscal year, adding that relatively high inflation is a manifest of economic weakness.
Yaseen Anwar termed ongoing power crisis in the country as one of the core factors behind economic problems faced by the country.
He said that GDP growth in the current fiscal year is expected to remain between 3 to 4 percent, adding that central bank has decided to cut the key discount rate by 150 bps to 10.50 percent to boost economic activity in the country.
State Bank Governor said demand of loan in the private sector has been limited.
The State Bank of Pakistan (SBP) last changed rates when it made a 150 point cut on Oct 8, 2011, bringing the benchmark rate to 12 per cent.
The Governor said that increased remittances from overseas Pakistani workers and reimbursements from the United States for Pakistan’s assistance in the war against militancy had helped the country’s foreign exchange reserves.
Governor state bank said “However, concerted efforts to bridge the gap between revenues and expenditures through structural reforms are necessary to bring monetary stability and economic growth on a sustainable basis,”
Even the loans taken by private sector were mostly by non-banking financial services, Governor said.
He said government debts were a major concern of the economy, it had promised to reduce its loan but it did not do that which is in fact a violation of State Bank rules.
Governor State Bank has said Pak economy under multiple pressures.
Friday announced the Monetary Policy for the two months of Fiscal Year 2012-13.
Due to higher interest rate policy, private sector growth is choked as a large part of the credit has been diverted to the government sector. This has adversely affected the overall economy, thus calling in for a serious thought on easing cost of borrowing.
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