ISLAMABAD: Finance Minister Senator Ishaq Dar has welcomed the announcement by State Bank of Pakistan (SBP) to reduce its policy rate from 8 per cent to 7 per cent and said it would spur business and economic activities in the country.
In a statement, Minister said the SBP decision was a manifestation of improvement in macroeconomic conditions as reflected in multi-year low inflation and considerably improved external account.
The current CPI inflation of 4.8% in the first ten months of the current fiscal year supports the SBP decision, he added.
Ishaq Dar said the historical reduction in the interest rate was now expected to be translated into significant decline in the market interest rates.
“With already a significant decline in inflation containing increase in cost of production, the decline in interest rate provides a golden opportunity to the industry and other borrowers to expand their current business activities and increase their investment in Pakistan,” he said.
“Indeed, with stable banking system, increased construction activity, and buoyant investor confidence, the private sector credit should pick up both for working capital as well as for fixed investment. This will further contribute towards the acceleration in GDP (gross domestic product) growth for fiscal year 2015-16,” he added.