State Bank of Pakistan (SBP) Governor Dr. Reza Baqir has advised the media not to compare SBP’s decisions on the policy rate with those of central banks belonging to the advanced economies. He said this while announcing three steps to deal with the situation created after the spread of COVID-19 on Tuesday.
While talking to the commerce reporters here at SBP Main Building, the SBP governor spoke on three major measures taken by the central bank; firstly, the Monetary Policy Committee of State Bank cut its policy rate by 75 basis points; secondly, he announced a Temporary Economic Refinance Facility (TERF) and its Shariah compliant version to stimulate new investment in manufacturing; and the third step he talked about was Refinance Facility for Combating COVID–19 (RFCC) and its Shariah compliant version to support hospitals and medical centers in combating the spread of COVID–19.
He said together with the domestic deceleration in food prices and significant decline in consumer price expectations, the outlook for inflation in Pakistan had therefore improved, paving the way for today’s rate cut.
The SBP stands ready to take whatever additional actions that may be necessary to safeguard prices and financial stability and support economic growth, he said.
To a question, SBP chief said the central bank was ready to take more measures and increase financing facilities in case the situation worsens due to spread of COVID-19.
Another question about flight of hot money from the country, he said it was international scenario. Sensing more security, the people were opting to invest their money into dollars.
He said the reforms taken by SBP had yielded results. Now, the reserves were built.
About 75 basis points cut in the policy rate, he said the monetary policy committee had taken the decision after evaluating internal economic conditions of the country.
The MPC decisions on policy rate depended on the available quantitaative information about economic indicators.