SBP urged to play proactive role

Islamabad: Renowned economist Dr Sajid Amin has said that Pakistan needs a central bank and monetary policy which, while delivering its formal mandate of price stability, is considerate of the pressing challenges faced by the country today including extreme poverty, joblessness, employment, and burgeoning inequality. Dr Amin was sharing his views at a hybrid seminar on “Social footprint of monetary policy in Pakistan” organised here by Sustainable Development Policy Institute in collaboration with the Department of Economics, University of Karachi.

Dr Amin added that the monetary policy should target an inflation rate of 5% for Pakistan because a higher inflation target, such as 7%- 9%, does not commensurate with the welfare aspect of the public. The effective monetary policy can also strengthen the soundness of other public policies such as its counterpart fiscal policy in order to deliver on social, environmental, and economic development, he continued.

The autonomy of the State Bank of Pakistan is a step in the right direction which will empower the institution to roll out an effective monetary policy for addressing the social implications of the country, he said adding that the autonomy will not only empower SBP but it will also measure the performance of the banking regulatory for implementing the new regime of targeting inflation through a forward-looking monetary policy.

He urged SBP to deliver on price stability to prevent the purchasing power of the people from being eroded which could be effectively done through an Integrated Inflation targeting (IIT) regime. Besides, lower inflation will help reduce poverty through greater job opportunities, increased income, and purchasing power on account of higher economic growth.

Dr Amin asserted that it is imperative for the SBP to expand its research agenda to explore how its decisions and actions that can affect social outcomes.

Dr Niels Hegewisch, Country Director, and Dr Vaqar Ahmed, Joint Executive Director, SDPI, also spoke on the occasion.