The Board of Directors of SBP, in its meeting held on 19th July, 2014, decided once again to leave the policy rate unchanged at 10 percent for the next two months. A status quo was widely anticipated as the economy was still not out of woods despite improvement in some of the key macroeconomic indicators. According to central bank's Monetary Policy Statement (MPS), economic indicators are certainly better at the beginning of FY15 than a year ago: foreign exchange reserves were considerably higher, forex market had stabilised, growth in broad money (M2) was contained due to a deceleration in government's budgetary borrowings, private sector credit was picking up along with a moderate economic recovery and inflation remained in single digit. More specifically, year-on-year growth in M2 had decelerated to 12.5 percent by end-June, 2014 - the lowest rate of monetary expansion during the last three years. This was mainly due to a significant reduction in government borrowings for budgetary support from the banking system that provided necessary space to the private sector to borrow from banks; it also led to lowering inflationary expectations. The growth in domestic debt during FY14 had decelerated due to a lower fiscal deficit and increase in external financing. Foreign inflows had resulted in a capital and financial surplus of dollar 6.1 billion during July-May, 2014 which was a marked improvement compared to the surplus of only dollar 465 million in the corresponding period last year. From a low level of dollar 2.8 billion on 7th February, 2014, SBP's foreign exchange reserves had increased to dollar 9.6 billion by 4th July, 2014 and exchange rate had stabilised slightly below Rs 99 to a dollar. The average CPI inflation at 8.6 percent in FY14 was in single digit for the second consecutive year. Thanks to a better LSM performance, real GDP had grown by 4.1 percent in 2013-14 despite challenging security conditions and energy shortages.