SBP keeps policy rate on hold at 5.75pc

Foreign investment to hit hard times; inflation to come down and loan situation in private
sector to become worse

KARACHI: The central bank, as widely expected, kept the benchmark interest rate unchanged at 5.75 percent on Saturday, staying focused on containing rising inflation while adopting a more dovish tone in response to the government’s call for help to boost economic growth.

The monetary policy would bring hardships to foreign investment and bring down inflation in the country. The debt situation in the private sector could get worse.

“The Monetary Policy Committee, after detailed deliberations, has decided to maintain the policy rate at 5.75 percent (for the August-September period),” Ashraf Wathra, Governor State Bank of Pakistan (SBP), told a news conference. 

The bank unexpectedly cut the target policy rate to 5.75 percent from 6 percent on May 21 and the current policy rate is hovering at historically low levels. The rate has seen a cumulative reduction of 425 basis points from 10 percent in October 2014. The central bank slashed its key policy rate by 75 basis points in the last fiscal year of 2015/16.