Cut in interest rate likely in new monetary policy

ISLAMABAD - Governor State Bank of Pakistan Saleem Raza on Thursday hinted that interest rate might go down in the upcoming monetary policy. Yes, there is a chance of decrease in interest rate if the inflation remained under control and other economic indicators were stable, Governor State Bank responded to a query during his media talk after the concluding session of the 25th Annual General Meeting and Conference of Pakistan Society of Development Economists (PSDE). The three-day conference titled 'Investing in People was organised by Pakistan Institute of Development Economics. Earlier, while addressing the Conference, the Governor said that independence of the Central Bank was critical for effective macro-economic management. He also emphasised the need for better coordination among all financial institutions in formulation of monetary policy. Renowned economist Dr Mohsin S Khan delivered the Quaid-i-Azam lecture on inflation targeting. He said SBP's move towards inflation targeting was feasible, as, he said, all the pre-requisites had been satisfied except the fiscal dominance of the Govt. He said flexible exchange rates and independence of the SBP were vital in targeting inflation in the country. State Banks move would ensure macroeconomic stability, which is a precondition for robust and sustained growth, he said. Dr Rashid Amjad, President PSDE, supported independence of State Bank but said it should not mean that the Bank would never talk to Minister for Finance and Planning or other financial institutions while formulating monetary policy. No institution can work in isolation in an integrated economy, he added. Dr Robin Burgees delivered the Gustav Ranis Lecture on Weather and Death: Public Policy Challenges for South Asia . Dr Robin Burgess highlighted the impact of climate change on the mortality in the context of public policy options available for the Govt. Investigating empirically the historical data for India, Dr Burgess said that the key role of policy makers in minimizing the vulnerability of rural population in less developed countries is related to the weather shock. He pinned down the importance of estimating the true cost of those public policy initiatives particularly of climate change cost. Highlighting the policy implications, he stressed the need to raise the rural agricultural income through public support preferences.

The writer is a member of staff and can be reached at khalidaziz100@gmail.com

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