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SBP announces monetary policy, keeps interest rate unchanged

ISLAMABAD: The State Bank of Pakistan (SBP) has announced the monetary policy for next two months today, maintaining the key interest rate at same level of 10 per cent, ARY News reported.

The decision was taken by the Central Board of Directors of SBP at its meeting held under the chairmanship of Governor SBP Ashraf Mahmood Wathra in Karachi.

According to SBP press release, it was decided after witnessing stable macroeconomic conditions. It stated that the inflation decline to 7.0 per cent in August 2014, which is its lowest level since June 2013. Moreover, growth rate also improved to 4.1 per cent growth rate in Fiscal Year (FY) 14 adding that real economic activity is expected to continue in FY15.

Policy vigilance requires balancing the tradeoffs between ensuring the continuation of macroeconomic stability, especially in the external sector, and assuaging the fallout of potential damages due to floods. Therefore, the Board of Directors, State Bank of Pakistan, has decided to keep the policy rate unchanged at 10 per cent, added the press release.

The monetary policy rate is the rate at which commercial banks are allowed to borrow from the central bank’s discount window. The central bank uses this tool to control money supply in the economy.

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