ISLAMABAD: State Bank of Pakistan will announce the last monetary of the current fiscal year today.
The expected policy will remain in effect for the following two months. Financial experts expect the interest rate to be reduced further in light of the current economic conditions, citing a 75 to 100 basis points reduction in interest rates.
Industrialists have demanded that the interest rate be reduced to 5% by State Bank if the meaningful economic recovery is expected.
Since the beginning of the coronavirus pandemic, the State Bank had slashed the policy rate by 425 basis points in March and April, from 13.25 to 9 percent.
It had cut the policy rate by 75 basis points from 13.25 percent to 12.5 percent on 17th March, by a further 150 basis points to 11 percent on 24th March, and by 200 basis points to 9 percent on 16th April.
In the last monetary policy statement on 16th April, the State Bank had said Pakistan’s economy is expected to contract by 1.5 percent in the fiscal year 2020, before recovering to around 2 percent growth in the fiscal year 2021.
Inflation was also expected to be closer to the lower end of the previously announced 11-12 percent range this fiscal year, and to fall to 7-9 percent range next fiscal year.
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