Combating coronavirus: Pakistan slashes policy rate, cuts growth outlook

Combating coronavirus: Pakistan slashes policy rate, cuts growth outlook

The State Bank of Pakistan (SBP) slashed the country's policy rate for the third time in a month by 200 basis points to 9 per cent to counter the growing financial uncertainty and ease businesses amid the Covid-19 pandemic, said a statement.. According to the statement from the SBP issued on Thursday evening, the economy is expected to contract by 1.5 per cent in the ongoing financial year ending on June 30, 2020, before recovering to around 2 per cent growth in the fiscal year ranging from July 2020 to June 2021, reports Xinhua news agency.. The bank said the decision was taken after observing the reduction in growth and inflation expectations and to "cushion the impact of the coronavirus shock on growth and employment, including by easing borrowing costs and the debt service burden of households and firms, while also maintaining financial stability".. The central bank hoped that the cut would supplement other measures to support the economy, including concessional financing to companies that do not lay off workers, one-year extension in principal payments and doubling of the period for rescheduling of loans.. It said the reduction in the rate, which was 13.25 percent before March 17, would also