Karachi/Islamabad (Newsman): State Bank of Pakistan has reduced the discount rate by 250 basis points to 15%. The decision is made by Monetary Policy Commitee of the State Bank of Pakistan.
The decision is made because the CPI inflation has been falling with a greater speed and had touched the band of 6-7% in last two months consecutively. This had pushed the policy makers to slash the rate in one go.
Tight monetary policy that is keeping the rate higher, was a decision, which had completed its work and the inflation has reached to its medium-term target. However, this tight monetary policy will keep playing its role in future too to sustain growth.
A real cut in food prices, a good cut in oil prices and globally too and absence of any adjustment in electricity or gas tariff also helped in this duration to reduce the inflation.
SBP laos believes the inflation might remain volatile in near future before getting a real adjustment in near future term.
The market has taken this news very positively and are expecting the inflation rate to stay low in future would help further rate cut in future.