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SBP Keeps Rate on Hold

SBP Keeps Rate on HoldSBP Keeps Rate on Hold

State Bank of Pakistan kept its key policy rate unchanged at 5.75% on Saturday, the bank said in a statement, citing stable inflation expectations and the gathering pace of economic activity, Reuters reported. The real GDP growth in FY17 was provisionally estimated at a 10-year high of 5.3% thanks to a revival in domestic demand. “The upbeat economic sentiments and low interest rates have encouraged the private sector to undertake capacity expansions,” the statement said. Private sector credit showed a net expansion of 503 billion rupees ($4.81 billion) during the nine months through April, well above the 334 billion rupee expansion recorded in the corresponding period of last year, the statement added. Going forward, official inflows are expected to support foreign exchange reserves. A sustained increase in other private inflows–foreign direct investments and export earnings in particular–is required to fully finance the surge in imports. The statement said funds for infrastructure related to the China-Pakistan Economic corridor were expected to boost foreign direct investment inflows.

 

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