COVID-19: SBP slashes interest rate to 8 percent

KARACHI - The State Bank of Pakistan (SBP) has cut its key interest rate by one percent and the new rate has come down from nine percent to 8 percent.

According to a press release, the Bank's Monetary Policy Committee announced the decision on Friday. The interest rate has been reduced keeping in view the coronavirus situation in the country. The SBP has reduced the interest rate by 5.25 percent since March 17.

The central bank, earlier, announced that it will provide loans to health facilities on a 3% markup to counter coronavirus outbreak. The SBP declared that the inflation rate will come down in the coming months while the prices of petroleum products will also decrease.

Local businesses and exporters have lately been protesting at high borrowing costs, which they said was harming investment.

The SBP, in January, left the interest rate unchanged at 13.25 percent. The SBP announces a target rate every two months, which serves as the benchmark interest rate for overnight funds in the interbank market. It is one of the tools the central bank uses to ensure price stability in the economy.