KARACHI: State Bank of Pakistan has decided to raise its policy rate by 50 basis points to 13.5 percent with effect from Sept. 30, 2010.
The SBP's Central Board of Directors in its meeting here on Wednesday took this decision. SBP Governor, Shahid H. Kardar chaired the meeting, said a statement issued by SBP.
The monetary policy stance is formed by the consideration that the impact of continued inflation is substantial and felt by the entire economy. A tightening of the stance is thus called for in full recognition that the difficulty to contain fiscal deficit has resulted in the private sector bearing the full brunt of such an adjustment, the State Bank explained the rationale behind the increase in policy rate in its Monetary Policy Decision.
It said the next quarter will be crucial in forming an assessment of the effectiveness of government efforts to contain the fiscal deficit and its inflationary borrowings from the
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