Pressure mounts on SBP for rate cut

Pressure is mounting on the State Bank of Pakistan (SBP) to call an emergency meeting and review the current interest rate amid a drop in inflation, according to sources in the financial sector. Just before release of the latest inflation figures, the central bank kept the interest rate unchanged when it announced the monetary policy on April 29. The Consumer Price Index (CPI) fell to 17.3 per cent last month, strengthening trade and industry’s clamour for a respite from a record high interest rate. Most financial experts were hopeful of a rate cut this week, but were surprised to see the over-cautious approach of the SBP.Interest rate kept unchanged despite significant drop in CPI The trade and industry widely criticised the central bank for not reducing the interest rate as it had made the cost of doing business prohibitive and rendered their products uncompetitive. However, the latest inflation data has once again encouraged the stakeholders to ask the government for slashing the interest rate. Sources in the financial sector said people from trade and industry have been pressing the government to persuade the SBP to bring down the rate. “It is illogical that SBP fixed the rate at 22pc when the CPI was 29pc, but keeps it unchanged when inflation is down to 17.3pc,” lamented a senior banker.