Experts welcome SBP interest rate cut by 2 per cent
17 Apr 2020
State Bank of Pakistan. File
Financial experts have welcomed the State Bank of Pakistan’s (SBP) decision to slash interest rate. SBP on Thursday cut its key interest rate by two per cent. The new rate has come down from 11 per cent to 9 per cent.
The State Bank’s Monetary Policy Committee announced in a statement their decision to cut the policy rate by a further 200 basis points to 9 per cent. This reduces forward looking real interest rates to around zero, which is about the middle of the range across most emerging markets.
The interest rate has been reduced keeping in view the coronavirus situation in the country. The interest rate declined by 4.25 per cent during one month.
Earlier, the SBP announced that it would provide loans to health facilities on 3 per cent markup to counter coronavirus outbreak. The SBP declared that inflation rate would come down in the coming months while the prices of petroleum products will also decrease.
Governor State Bank of Pakistan Reza Baqir has said that the central bank is constantly working with stakeholders and taking appropriate measures to bring financial relief and provide pragmatic support to the industries in order to maintain financial solvency and retention of the workforce especially in these trying times.
“SBP is constantly engaged with bankers to ensure that the initiatives undertaken by SBP are implemented on fast track basis in order to achieve the objectives,” he added while speaking at a meeting with Directors of Employers Federation of Pakistan through a 75-minute video conference to discuss the SBP Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns.
These include direct deposit of wages and salaries into worker’s accounts, payment through employers to workers if the employers provide complete information to the lending banks and priority to those employers whose payroll amount is up to Rs200 million for three months.
Moreover, the active taxpayers would get a discount of 1% in the markup rates as an incentive. Baqir also shared that SBP has taken into account the concerns of the SMEs while structuring the Scheme.