SBP hints at no cut in interest rate

[Naveed Yaseen]

KARACHI: The central bank on Tuesday indicated that there would be no cut in key discount rate in its interim monetary policy review expected later this month because of persistently high inflation.

“We expect inflation to come down to 11 per cent by June and then to single digit in subsequent six months,” said State Bank of Pakistan Governor Salim Raza. “That is when we need to shift the gear to support growth.”

Speaking here at the inauguration of a branch of Barclays, he said Pakistan was going through a period of low growth and blamed inflation as one of the reasons stifling it.

The SBP raised the interest rate at which it lends to commercial banks to 15 per cent late last year in a bid to curb inflation, which has until now not come down significantly.

Including the latest one, Barclays has opened nine branches in major cities in less than a year. While its outreach remains low, the multinational bank has brought expertise and latest methods to run banking and other financial services in the country.

As part of those systems, which Barclays and other foreign banks have in place, there are strong anti-money laundering controls, which include clear scrutiny of customers and maintaining close relationship with them.

About efforts to check terrorist financing networks in the country, Salim Raza said all relevant international laws had been signed by the government. “I know only few foreign banks have the expertise to implement those systems but others are trying them too.” He asked commercial banks to train their staff in anti-money laundering (AML) control.

http://www.thenews.com.pk/daily_detail.asp?id=172599