Islamabad, October 09: In a bid to boost investments and growth, Pakistan’s central bank has reduced policy rate by 150 basis points to 12 percent, authorities said.
The decision was taken at a meeting of the State Bank of Pakistan’s (SBP) central board of directors Saturday.
‘Severe energy crisis and precarious law and order conditions continue to render domestic economic environment least conducive for productive activities,’ said the central bank while lowering the rate.
‘Concerns regarding weak private sector credit growth and falling real private investment expenditures remain along with a likelihood of rise in real interest rates,’ it added.
Year-on-year inflation in September 2011 went down to 10.5 percent from 13.3 percent in June 2011.
‘There is a decline in CPI inflation and government borrowing from SBP is lower than its end-June level. Led by consistent inflow of workers’ remittances the external current account position is comfortable though there has been some decline in SBP’s foreign exchange reserves,’ it said.
However, the central bank in its monetary policy review said risks to macroeconomic stability emanating from fiscal weaknesses and falling foreign financial inflows had not receded yet.
-IANS