SBP reduces interest rate by 100 bps to 7 percent

KARACHI: State Bank of Pakistan has reduced the key interest rate by 100 basis points to seven percent.

The Monetary Policy Committee (MPC) of the central bank held a meeting on Wednesday and decided to reduce the policy rate based on improvement in the inflation outlook.

The central bank maintained that domestic economic slowdown continues and risks to growth have increased.

Against the backdrop of receding demand-side inflation risks, the priority of monetary policy has shifted toward supporting growth and employment during these challenging times.

The meeting asserted its commitment to supporting households and businesses during the COVID-19 crisis and minimising damage to the economy.

It noted that approximately Rs. 3.3 trillion worth of loans due to be repriced by early July 2020, this was an opportune moment to take action from a monetary policy transmission perspective.

This is the fifth time that the State Bank of Pakistan has reduced key interest rate this year, marking a historic decline of 6.25 percent/

On May 15, the central bank reduced the interest change by 100 basis points to eight percent. The interest rate was at 13.25 percent earlier this year but has been reduced to the adverse effects of the coronavirus pandemic.