WebExPk Affordable Hosting

Saturday, March 26, 2011

SBP keeps policy rate unchanged at 14 pct

LAHORE: The State Bank of Pakistan on Saturday announced its monetary policy Monday, stating that the discount rate will remain unchanged at 14 percent for the next two months.

Briefing newsmen here, SBP Director Monitoring Policy Hamza Malik, said the decision was taken at a meeting of the Central Board of Directors of State Bank of Pakistan held under the chairmanship of SBP Governor Mr. Shahid H. Kardar in Lahore today.

‘Given a favourable external current account position and relatively disciplined government borrowings from SBP, the immediate risks to macroeconomic stability seem to have subsided, at least for the next two months. Therefore, SBP has decided to keep the policy rate unchanged at 14 percent,’ the State Bank said in its Monetary Policy Decision.

It, however, said that there is little room for complacency as the risks to the economy may increase if meaningful economic reforms are not initiated to address the structural weaknesses. Inflation persistence still remains high, which is largely formed by recent past levels of inflation and perceptions of economic agents about the credibility and direction of monetary and fiscal policies in controlling inflation and promoting long-term sustainable economic growth.

It further said the current stability in the financial markets provides valuable time to initiate structural reforms. Not only are urgent measures required to address the energy crisis to increase productive activity but the fiscal position also needs considerable strengthening to cope with rising debt obligations and to ease borrowing pressures on the banking system.

Analysts had expected the SBP to leave the key policy rate unchanged in its monetary policy for the subsequent two months because of the resurgent inflation.

The central bank also left the rate unchanged on Jan. 29.

No comments:

Post a Comment