SBP announces monetary policy: 13 year low interest rate

[maxpayne]

KARACHI: The State Bank of Pakistan on Saturday announced the new monetary policy for the next two months keeping interest rate at an all time low since 13 years.

The central bank reduced interest rate by 0.5 percent and brought it down to eight percent.

Experts were expecting a reduction of one percent.

Despite a significant cut in interest rates during the current fiscal year, there has been no increase in loan acquisition by the private sector.

On the other hand, government borrowing from the commercial banks has amounted to over one trillion rupees in eight months.


SBP announces monetary policy: 13 year low interest rate | BUSINESS - geo.tv


Does it means GoP is feeling more secure economically and want to invite business by private sector?

 

[WishLivePak]

This is good.

High interest rates = more savings, less development
low interest rates = more consumption, less savings

8% is still too high. Need to bring it down slowly slowly to around 2-3%. I think US has had it at around 0% after recession, so people save less and consume more.

 

[SBD-3]

Despite lending rate cut, the credit offtake reduced YoY, which is a concern that financial intermediation is not taking place. Banks still see increased credit and business risk and prefer to park money in Government papers i.e. MTBs and PIBs.