SBP latest cut to boost trade confidence, strengthen economy, says govt

• The reduction in interest rates is a clear manifestation of Prime Minister Imran Khan's commitment to keeping the economic activity moving in the country.
• The Monetary Policy Committee (MPC) of SBP in its emergency meeting on Thursday decided to further cut the key policy rate by 200 basis points (bps) to 9 percent.

The latest reduction in the policy rate announced by the State Bank of Pakistan (SBP) will boost trade confidence and strengthen the economy of the country, said government spokesperson Firdous Ashiq Awan.

“The reduction in interest rates is a clear manifestation of Prime Minister Imran Khan's commitment to keeping the economic activity moving in the country. A two percent reduction in interest rates will help boost trade confidence and strengthen the economy,” said Special Advisor to PM for Information and Broadcasting Firdous Ashiq Awan in a tweet post on Friday.

The Monetary Policy Committee (MPC) of SBP in its emergency meeting on Thursday decided to further cut the key policy rate by 200 basis points (bps) to 9 percent to minimize the Coronavirus shock on economic growth.

This is the third cut since last month. The MPC had reduced the interest rate by 75 bps from 13.25 percent to 12.50 percent in its scheduled meeting on March 17, 2020. While, after one week on March 24, the MPC called an emergent meeting in the wake of evolving economic impact of the Coronavirus and decided to cut the policy rate by 150 bps to 11 percent.

The third reduction in key policy rate on Thursday was announced by the Committee to support the economy, which is expected to contract by -1.5 percent in FY20. Cumulatively, the MPC has cut the policy rate by 425 bps from 13.25 percent to 9 percent in one month to address the economic slowdown.