The State Bank of Pakistan (SBP) will release Monetary Policy decision today (Saturday) for next two months which experts believe will be no different to the previous policy. In the last Monetary Policy review on January 29, 2011 the SBP left key policy rate unchanged at 14 percent to support the government efforts to cut expenditure and raise revenue, besides improving external current account and stabilising financial markets.
The SBP board is meeting on March 26, 2011 at SBP Banking Services Corporation Lahore to review the Monetary Policy steps. Before the SBP board meeting, Monetary Policy Committee (MPC) constituted by the SBP will finalise its recommendations and suggestions regarding the Monetary Policy and later the board will take a final decision on the key policy rate.
Analysts and economists expect that the SBP will hold interest rate stable because of controlled current account deficit and some decline in the government borrowing. "The State Bank of Pakistan will keep discount rate unchanged at 14 percent as inflationary pressure has slipped to a seven-month low and the government steps to cut the budget deficit have shown positive signs," they said.
The federal government has already taken some bold steps to raise more revenue and announced spending cuts to reduce rising fiscal deficit. "The inflationary pressure has eased, new tax measures to enhance revenue, cut in government spending by reducing federal Cabinet have provided room for keeping the policy rate unchanged," they added.
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