Interest rate cut further to 11% amid virus pandemic

Pakistan has further cut its key interest rate by 150 basis points to 11% amid the coronavirus outbreak and the impact it will have on the global economy.

The State Bank of Pakistan made this announcement in a press
statement after its Monetary Policy Committee called an emergency meeting on
Tuesday.

This is the second cut announced in a week by the central
bank. The business community had been demanding a big cut in monetary policy
rate to boost economic growth.   

“Substantial new information on global and domestic
developments has become available since the last MPC meeting. Globally, the coronavirus
has severely increased in reach. This has caused major disruptions to economic
activity and the IMF has also significantly downgraded its global growth
outlook for 2020 from 3.3% growth previously to below zero,” read SBP’s statement.

It said these global developments have led to a sharp fall
in international trade. “On the domestic front, since the last MPC, the number
of COVID-19 cases has increased considerably, prompting social distancing and
curtailment of activity. This is expected to lead to noticeable slowdown in
domestic demand,” it said explaining the reasons for the second cut.

The MPC believes that this rate cut will “cushion the growth
slowdown while protecting inflation expectations”.

On March 17, the central bank had slashed the policy rate by
75 basis points to 12.50%.

The official statement had attributed the cut to the central
bank’s efforts in aiding healthcare and trade amid the coronavirus pandemic. It
noted that the viral outbreak has caused a slowdown in the global economy and
also precipitated an oil crisis.

Article source: https://www.samaa.tv/money/2020/03/interest-rate-cut-further-to-11-amid-virus-pandemic/