State Bank drops interest rate by 1 percent

ISLAMABAD: The State Bank of Pakistan cut its key discount rate to 8.5 percent from 9.5 percent on Saturday, in line with analyst expectations, citing lower inflationary pressure due to falling global oil prices.

State Bank Governor Ashraf Wathra said the new rate would be in place for two months until the next central bank meeting to discuss further policy.

“Keeping in view the declining inflation due to falling international oil prices, (the) central bank has decided to lower the discount rate,” Wathra said in televised remarks.

Business leaders had earlier called on the central bank to ease monetary policy to encourage private sector investment and accelerate economic growth.

Finance Minister Ishaq Dar had already announced the 1 percent cut in interest rate earlier today in a press conference hours before the SBP governor made the official announcement.

Wathra said that the decision to cut interest rate was taken by the central bank’s board of directors, and that Dar had mistakenly thought the monetary policy announcement was scheduled for 3pm instead of 5pm.