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SBP maintains interest rate at 5.57%

Karachi: The State Back of Pakistan (SBP) has announced on Saturday to left interest rate unchanged for the next two months at the rate of 5.75% keeping in view the inflationary numbers below the expectation.

“The inflation expectations in the current fiscal year continue to remain well anchored,” the central bank’s bimonthly Monetary Policy Statement reads which was issued today. The stability was made possible due to the absence of huge supply side pressure.

The rate has been maintained since May, 2016 which is over four decades low. During the  first half of fiscal year 2012-13 the rate was double than today which was 10%.

The central bank added that the real economic activity continues to gather pace at the back of better agricultural output, enhance in Large-scale Manufacturing sectors, and an increase in the credit to private sector.

The statement added that the gross domestic product rate was expected to be improved by Fiscal Year 2017 (FY17).

It was added that prudent monetary policy stance has been translated well into low and stable market interest rates, which was the incentive for private sector to borrow from commercial banks to financially boost their businesses and investment activities.

On the same way, consumer financing gradually improved in the first eight months of the current fiscal year which enhancedthe  interbank liquidity conditions also spurred the growth in private sector credit.

The expansion in economic activity was also due to the significant increase in imports, which along with lack of any continuous improvement in exports and a small decline in remittances pushed the current account deficit to $5.5 billion during Jul-Feb, Fiscal Year 17. While net financial flows remained higher, which were not enough to finance the current account  deficit.