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KARACHI: The Monetary Policy Committee (MPC) of the State Bank of Pakistan has decided not to hold the regular meeting in July as it has already taken some actions to support the economy. The regular meeting of the MPC was due in July for deliberations on key economic issues to take a decision on key policy rate, however, now the meeting has been deferred as the committee has already cut the policy rate by some 6.25 percent in last four months.

According to the State Bank of Pakistan (SBP) announcement, given the number of MPC meetings that have taken place in recent months and actions taken in those meetings, the MPC does not consider it necessary to hold the regular meeting of July 2020.

The next regular meeting of the MPC will now be held in September 2020. However, the MPC said that it will continue to observe economic conditions and stands ready to take whatever further actions may become necessary in response to any adverse impact on the economy because of the pandemic or any other factor.

The positive inflation outlook and the ongoing economic slowdown had forced the MPC to call three emergency meetings during the last four months to review the policy rate. Since March 2020, overall five meetings of the MPC were held, of which two were scheduled and three were emergency meetings.

The MPC had reduced the interest rate by 75 bps to 12.50 percent in a regular meeting on March 17, 2020. Just after a week on March 24, an emergency meeting of the MPC was called in the wake of the evolving economic impact of the coronavirus and the committee cut the policy rate by 150 bps to 11 percent.

A third reduction of 200 bps in the key policy rate was decided by the MPC at yet another emergency meeting held on April 16 to support the economy. The fourth reduction of 100 bps was decided in a scheduled meeting on May 17, 2020. The fifth rate cut of 100 bps was announced on June 25, 2020. Cumulatively, the MPC reduced the key policy rate by 625 bps from 13.25 percent to 7 percent during the last four months to address the risk to economic growth in wake of Covid-19.

Copyright Business Recorder, 2020

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