- Interest rate at the lowest in three years, more possible reductions.
- Solid reserves providing a base to stabilize the local currency.
- The Governor of the SBP cites a current account surplus for the flexibility of policies.
The governor of the central bank of Pakistan, Jameel Ahmad, said that the drop in inflation had created an “ample place” for an additional monetary easing, just a day after the country’s reference rate of the country was reduced to its lowest level in almost three years, The news reported by citing Bloomberg.
Talk to Bloomberg TV Shery Ahn Tuesday, Ahmad stressed that inflation of the head and basic is on a downward trajectory, saying: “With that, we have ample space to reduce rates.”
“Our short -term real interest rates are quite positive and this offers us flexibility for rate reductions,” said Pakistan State Bank (SBP).
The inflation of Pakistan, which culminated at a summit of 38% in May 2023, has now reached levels in a figure in recent months. The central bank aims to maintain inflation in the range from 5% to 7%, but it reported potential risks for prospects, including fluctuations in raw material prices and protectionist policies in large economies.
“We are not facing at this stage at any pressure with regard to the external account,” said Ahmad, questioned about the impact of volatile prices of raw materials on future rate cuts.
“Given the current price level and also future prospects, I think we have ample space,” he said, adding that the current account is surplus, giving the Central Bank “the confidence that we can review the policy rate and revise it slightly downwards. “”
Ahmad says that the central bank can revise the policy rates even more, after having reduced them to the lowest level in almost three years. He spoke exclusively about insight with Haslinda Amin ‘of his prospects for the economy, the loan of the country’s IMF and the Raboutisters with Saudi Arabia, the United Arab Emirates and China.
The central bank of the South Asian country has been around since June of last year to stimulate demand and support economic recovery. Bloomberg Economics expects the central bank to hold the key rate until December because prices can increase again.
Relaxation in recent months is a radical change of position for Ahmad, which had increased interest rates for a record of 22% in 2023, the country saw the fastest inflation in Asia in reason for the outbreak of energy costs.
Ahmad received a five -year term to lead the central bank of Pakistan in 2022 and was confronted with the challenge of stabilizing an economy which was broken by arrow prices, political instability and a depreciating currency.
Before becoming governor, Ahmad had spent more than three decades in various management positions at the SBP and the Saudi central bank.
In recent months, Pakistan has made its way out of the economic crisis, after having avoided a defect and obtained a bailout of the International Monetary Fund and Loans of Friendly Nations. The recovery has stimulated the feeling of investors and protected the local currency of the strong dollar in the last three months.
The current level of reserves “provides a base for the stability of the currency,” said the governor. Pakistan’s current foreign reserves amounted to $ 11.4 billion last week, a level that covers two months of imports.