SBP to announce new monetary policy tomorrow

The Central Bank decided to reduce Consumer Price Index, reduction in loans to the government and decrease in interest rate on the basis of improvement in continuing accounts but the situation has changed significantly in 54 days. Inflation rate has grown to 46 basis points, running deficit has increased to 1550 million and central bank debt stock has cross the limit set for the running fiscal years.The main factors contributing in SBP’s decision to reduce its policy rate by 50 or more basis points for the next two months would mainly depend on CPI (Consumer Price Index) inflation and government borrowing.Banking analysts said that inflow of workers’ home remittances may be a bridge for Central Bank officials to work on a reconcilable solution to the problem pertaining to the foreign exchange reserves and credit growth in the private sector.Moreover, the impact of floods in Sindh continue to haunt the economy with no respite to the industries as well and the consumers who matter much to the retail banking and its growth, a banking source at the Central Bank added.“Efforts to balance inflation and economic growth through monetary policy would be a difficult task,” he pointed out.