THE State Bank of Pakistan has cut interest rates by 1 percent, to 13 percent, which is two percent less than the high of 15 percent at which it kept its base rate until six months ago. Along with this decrease, State Bank Governor Salim Raza also announced the formation of an independent monetary policy committee, which would include outside experts, and also that the Monetary Policy Statement, in which it announces its rate for the coming time period, would now be every two months, rather than every quarter, as at present. Though Governor Reza painted a bleak picture of the economy, he did not make the much-needed commitment to make sure that the committee was allowed to set the interest rate keeping in view economic realities, not just the need of the government and foreign donors. The State Bank should restrict itself to ensuring transparency in its operations, not trying to influence them. It appears that the Bank intends to bring its rate, above which all banks set their lending rates, to 13 percent, which is not enough of a stimulus. The State Bank is making sure that it follows conservative policies at a very un-conservative time. What is now needed is a stimulus to the economy that will kickstart the private sector, and the present rate cut is probably not enough. The State Bank should be thinking of the economy as a whole, including the export sectors of the economy, when making monetary policy decisions, and should be making them with Pakistan's peculiar circumstances in mind. With the Governor also presenting a picture of the economy which did not see much relief for the common man, it was all the more the Bank's responsibility to take measures which tended to benefit the ordinary man, particularly in the field of fighting inflation. It was also disturbing to have the Governor discuss the IMF loan facility so calmly, The IMF sets very stringent criteria for its lending, and forces governments and central banks to what turn out to be anti-people policies, which also do not make the good economic sense the IMF portray them as. This is the case with Pakistan. The State Bank Governor should generate policies which make Pakistan independent of the IMF, not push it further into a position of dependence. This dependence is linked to the sufferings of the people, which are inextricably linked to the monetary policy that the State Bank is supposed to regulate. The State Bank should concentrate on shifting its focus to the suffering of the ordinary man, and it should realize that the only sound economy is one which contributes to the welfare of the ordinary citizen.