Karachi (Business Reporter): The State Bank of Pakistan (SBP) on Thursday, slashed interest rate by one percent. New interest rate will be 7%, stated a SBP press release. But, is it one of the few last cuts that SBP has managed to make in the given situation?
“Inflation trend is not likely to sustain at the current level, and an upward curve is expected in the coming months,” a banker said requesting anonymity. “Oil prices are comparatively higher in the international market which may affect local prices.” He said locusts are eating up our crops which will create demand and supply gap. Inflation may inch up in the medium to short-term period.
For the time being, SBP has managed to cut interest rate for the fifth time. The decision was taken after witnessing “improved inflation outlook.” SBP has reduced interest rate by 6.25% since the start of COVID-19.
The Monetary Policy Committee observed that the the economy is expected to recover gradually in the next fiscal year. “The recovery will depend critically on the evolution of the pandemic both in Pakistan and abroad,” SBP’s policy statement stated.