SBP reduces interest rate to 11 percent

SBP reduces interest rate to 11 percent

In a tweet the State Bank of Pakistan (SBP) has said: “MPC (Monetary Policy Committee) has decided to cut the policy rate by a further 150 basis points to 11 percent.”

With this decision, SBP has decided to decrease its ‘Policy Rate’ (Target Rate) from 12.50 percent to 11 percent. SBP Overnight Reverse Repo (Ceiling) rate will be at 12 percent i.e. 100 bps above the SBP Policy Rate of 11 percent. While, the SBP’s Overnight Repo (Floor) rate will be at 10 percent some100 bps below the SBP Policy Rate.

The SBP said that these global developments have also led to a sharp fall in international trade. The International Monetary Fund (IMF) has also significantly downgraded its global growth outlook for 2020 from 3.3 percent to below zero.

On the domestic front, since the last MPC meeting, the number of COVID-19 cases has increased considerably; leading to increased adherence to social distancing and badly disrupting day to day activities leading to a sharp decline in domestic demand.

SBP is also in the process of taking necessary regulatory measures in coordination with banks to address pressures on cash flows of borrowers through facilitating deferment and restructuring of their loans