Arab Today, arab today pakistan’s industry wants sbp policy rate at 7
Last Updated : GMT 21:17:01
Arab Today, arab today
Arab Today, arab today

Pakistan’s industry wants SBP policy rate at 7%

Arab Today, arab today

Arab Today, arab today Pakistan’s industry wants SBP policy rate at 7%

Lahore - Arabstoday

Pakistani industry wants the State Bank of Pakistan (SBP) to cut its key policy rate by 350bps to 7 per cent from the existing 10.5 per cent in the next two reviews to revive private investment in the manufacturing, spur growth and create jobs. Many analysts, bankers and business leaders are expecting up to 150bps cut in the next monetary policy review the market prepares for yet another reduction in the borrowing cost in the monetary policy review scheduled for on Friday. The bank had reduced the cost of borrowing by 150bps in its last review in its previous review in August after keeping it steady at 12 per cent since October 2011 when the discount rate was slashed by 150bps from 13.5 per cent. Earlier, the bank had reduced the rate by 50bps in July 2011. Analysts pointed out that the yield on benchmark 6-month T-bill was down to 9.8 per cent and on 10-year Pakistan investment bonds to 11.2 per cent while benchmark Kibor has slid to 10.2 per cent. “This indicates that the market is ready to embrace another reduction in the interest rates,” an analyst said on Thursday. Headline inflation recorded by consumer price index (CPI) has slipped to 8.8 per cent last month from 10.5 per cent a year earlier. Non-food, non-energy core inflation too dropped to 10.4 per cent while SPI (sensitive price index) and WPI (wholesale price index) are also showing a downward trend. “The proponents of tight monetary policy should appreciate that inflation has come down since the last cut in rate was announced. “The fact that inflation is slowing ever since the central bank cut the rate two months ago shows that further reduction in the cost of borrowing will have a salutary effect on prices because whatever escalation in prices has been noticed during the last five years is because of external factors -rising global oil and commodity prices -over which we do not have any control. “You cannot control imported inflation by hiking the interest rates. “The load of non-performing loans (NPLs) would reduce as a consequence of the reduction in the cost of borrowing,” said Gohar Ejaz, group leader of All-Pakistan Textile Mills Association (Aptma). From gulftoday

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