State Bank of Pakistan keeps the interest rate at 6%


ISLAMABAD: State Bank of Pakistan SBP has decided to keep policy rate unchanged at 6% for next two months. The policy rate is the benchmark interest rate that helps determine the general cost of borrowing in the economy. The interest rate is not changed to support Pakistani currency Rupee. The Pakistani currency performance is not admirable and the currency is among the Asia’s worst performing currencies this quarter. “If the central bank cuts rates now, it will only put excess pressure on the Rupee,” Hamza Kamal, an analyst at Shajar Capital Pakistan Pvt., said by phone before the decision. “There is an expectation that the U.S. Federal Reserve will hike up its rate in December and that will have a depreciating effect on the Pakistani rupee.” Pakistan also could have to face the problem of balance of payments crisis due the weakness of Pakistani currency Rupee. Pakistan should start to pay back IMF $ 6.6 billion loan to avoid a balance of payments crisis.