Islamabad: The State Bank of Pakistan (SBP) has notified another reduction in the national interest policy rate; bringing it down to a single digit, a news source reported. As such, the central bank has reduced the interest rate from 11% to 9%.
In the past few weeks, SBP has provided a cumulative reduction in the national interest policy rate of 4.25%. The reduction comes amid the uncertain global and national economy situation in the wake of the COVID-19 pandemic.
In regards to the latest reduction, an emergency meeting of the Monetary Policy Committee (MPC) announced slashing of 200 basis points. MPC was of the view that a reduction in the national interest policy rate would cushion the impact of the coronavirus situation in growth and employment in the country. The committee opined that the measure would ease borrowing costs and debt service burden of households and businesses while maintaining financial stability.
The MPC further highlighted that the cut in the national interest policy rate was in line with SBP’s recent efforts aimed at mitigating the impact of the COVID-19 pandemic on the national economy. This includes extensions in debt repayments, concessional financing to business organisations, and more. The committee added that the said reduction would also help revive the economic activity once the pandemic subsides.