LETTER: State Bank of Pakistan seems to have thrown up a surprise for everyone by reducing its main interest rate by 100 basis points to 7 percent in an unannounced move marking the country's fifth cut since the coronavirus began to spread through the country in March. Although SBP's step has been criticised by some economists, an interest rate cut seems to have been warranted by the fact that country's economy has been reeling under the shock of the pandemic, with economic activity coming to a grinding halt.
"The decision reflected the Monetary Policy Committee's view that the inflation outlook has improved further, while the domestic economic slowdown continues and downside risks to growth have increased," the statement from the State Bank of Pakistan (SBP) has been quoted as saying.
I congratulate the SBP's Monetary Policy Committee for responding to the challenges in a befitting manner.
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