Governor SBP Ashraf Mahmood Wathra addressing the monetary policy announced 100 basis points (one percent) cut in the discount rate, which going down to historic low of seven percent.
The central bank governor said that the cut in discount rate will boost business and trade in the country.
The SBP earlier cut its policy rate thrice since November 2014 to 8 per cent.
The main inflation indicator, Consumer Price Index (CPI), has moved to record low. The central bank and many analysts believe that the average inflation will remain in the range of 4-5pc by the end of the ongoing fiscal year.
Moreover, transfer of low international oil prices to local markets is expected to provide further relief to commodity prices and thus inflation would stand at low.
The balance of payment situation of the country is going to improve in future as the government is expected to receive inflows from the IMF and other international monetary agencies. The foreign exchange reserves presently stand at impressive $17.7 billion, which will further improve with inflows along with foreign direct investments and remittances.