January 17, 2014

State Bank keeps Policy Rate unchanged at 10.0 percent

State Bank of Pakistan (SBP) has decided to keep the policy rate unchanged at 10.0 percent. This was announced by the Governor, State Bank of Pakistan Mr. Yaseen Anwar while unveiling the Monetary Policy Statement (MPS) at a press conference at SBP, Karachi. The decision was taken at a meeting of the Central Board of Directors of SBP held under his chairmanship in Karachi today.
According to the Statement the SBP increased the policy rate by 50 basis points (bps) each in September and November 2013 mainly on account of two concerns. One was the continued deterioration in the balance of payments position while the other was worsening of inflation outlook.
The Statement said that the fundamental weakness in the balance of payments position is persistent contraction in net financial flows since FY08. Substantial repayments of IMF loans during the last two and a half years have only increased the pressure.
According to the Statement there is no room for complacency and considerable effort is required to bring a sustainable improvement in the outlook of external accounts.
The CPI inflation has increased during first half of FY 14. The important point is that the risk of demand