State Bank’s governor Raza Baqir said that the main responsibility of the State Bank of Pakistan is to curb the rise in inflation. In this regard, the Monetary Policy Committee observed that the annual inflation rate was 7-9%. Or if international oil prices rise, it is temporary and food inflation is also temporary, so the committee felt that there is no need to change interest rates because of them.
Riza Baqir said that the Monetary Policy Committee was of the view that there is no pressure on demand as our capacity is not fully utilized and there is a balance in forecasting inflation. For all these reasons, the Monetary Policy Committee should monitor the economic situation. He was of the view that the situation was getting better than before.
The economy of Pakistan in Covid19 was very difficult. It has gradually improved but it has not improved as we see for our nation, governer SBP said.
He said that it was important for the monetary policy to send a message of balance as there is no pressure on demand so the committee should co-operate for recovery. The new thing is that it is also forward guidance, in which not only the Monetary Policy Committee has announced what has been decided on interest rates in this meeting but also what is the monetary policy looking at interest rates in the future.
The State Bank of Pakistan had announced three reduction in interest rates in a period from March to April 2020 due to the negative effects of Corona virus on the national economy.