SBP likely to cut interest rate: ex-governor

ISLAMABAD: The Monetary Policy Committee of Reserve Bank of India took 72 hours to set repo rate at 6.5 percent. The bank rate in India was set at 14.5 percent in August 2000, which remained between 14.5pc and 4pc by May 2020. Now the bank rate of India has been maintained at 6.5pc.

The bank rate in Bangladesh and Sri Lanka is 8.5pc. In Pakistan’s neighboring country Afghanistan, the discount rate (bank rate) is 15pc. The rate in the United Kingdom has been set at 5.25pc on May 9, 2024. This is the highest rate in 100 years of the country’s history. The rate in Japan is more or less zero percent while in Pakistan, it has stood at 22pc since the last months of 2023.

On April 19, the Monetary Policy Committee of the State Bank of Pakistan decided to maintain the bank rate at 22pc. The committee will meet under the chairmanship of State Bank of Pakistan Governor Jameel Ahmed on June 10. It will make necessary announcements about the indicators of the country’s economy, including the rate.

A former SBP governor, who also remained the FBR chairman and ex-federal secretary, speaking on the condition of anonymity, hoped that the bank rate could be reduced by 2pc in view of the current economic condition. “However, since negotiations with the IMF are ongoing, it could also wish that the interest rate should not be reduced too much. The meeting may decide to cut the interest rate by one percent just to signal the market,” he added.