Pakistan cuts interest rate

KARACHI, March 22: Pakistan’s central bank cut its key interest rate by 0.5 per cent today in a bid to give the country’s improving economy further momentum.

“The central board of directors has decided to reduce the policy rate by 50 basis points from 8.5 per cent to eight per cent,” the Central State Bank of Pakistan said in a statement.

The interest rate reduction comes as inflation sits at eight per cent, down from a high of around 10 per cent last year.

On Saturday, the bank projected that inflation would fall to as low as four per cent by the end of this fiscal year on June 30. It also expressed hope that Pakistan’s GDP growth rate would surpass the 4.4 per cent recorded in the previous financial year.

Pakistan’s economy was in a mess when Nawaz Sharif took over as prime minister in May 2013, with the International Monetary Fund granting a $6.6 billion loan package later that year.The loan came on condition that Pakistan — which was suffering an energy crisis — would carry out extensive economic reforms.