Pakistan’s central bank reduced its key policy rate by 50 basis points to 9.5 per cent until mid-January, the State Bank of Pakistan (SBP) said in a statement issued yesterday.
The bank said favourable trends in global commodity prices, lower inflation and limited damage from recent floods were the main reasons behind the decision.
The decision was taken by the central board of directors of SBP at its meeting held under the chairmanship of Governor Ashraf Mahmood Wathra in Karachi.
The meeting observed that CPI inflation (YoY) in October, 2014 has come down sharply to 5.8 per cent.
“This decline is explained by: smooth food supplies, which contained the price of perishable items; falling administered prices, which incorporate the fall in international commodity prices, especially oil; low inflation expectations, as witnessed by IBA-SBP consumer confidence surveys; and a significant base effect,” said a handout given to the media.
Pakistan last week almost qualified for the release of a $1.1 billion installment from a International Monetary Fund (IMF) facility despite political turmoil and recent floods.
