Pakistan Cuts Key Rate By 50 Bps

(RTTNews) - Pakistan's central bank lowered its key rate by half a percentage point on Saturday as inflation is expected to slow further.

The Board of Directors of the State Bank of Pakistan decided to cut the policy rate by 50 basis points to 9.5 percent with effect from November 17. The bank last reduced the rate by 50 basis points in November 2013.

Inflation eased sharply to 5.8 percent in October. The likelihood for inflation to end the current fiscal year on lower plateau is high, the bank said.

The central bank said the current low oil prices could salvage some of the lost growth momentum. The main thrust to the growth momentum is expected to come from agriculture outcomes.

The fiscal consolidation of the government has positive implications for the monetary policy management of the central bank. In coming months, it would have a favorable impact on the private sector cycle, the bank noted.

According to SBP, the trade deficit is forecast to remain under pressure, while the healthy growth in workers' remittances would continue to assuage the weakness in current account deficit, to some extent.