KARACHI - State Bank of Pakistan (SBP) has postponed the announcement of new monetary policy for the first quarter of FY10 till mid-August, The Nation learnt. The new monetary policy was to be announced today (Saturday), but now it had been postponed to August 15, sources said. In this regard, the Central Bank had not given any specific reason for delay in the announcement of the new policy. It is important to mention here that the new monetary policy for the first quarter of the current financial year 2009-10 was to be announced on July 25, 2009 (today). While confirming this news, Chief Spokesman of SBP, Syed Wasimuddin, said that the date of monetary policy announcement has been extended from July 25 to August 15, 2009 on account of some unknown reasons. He declined to give any comment about SBP decision of delaying the issuance of upcoming monetary policy statement on the given date. However, he said that the BoD of Central Bank had to hold a meeting on Saturday (today) to conduct the policy review for July-September quarter FY10 but it has been postponed till August 15, 2009. Muhammad Imran Khan, Head of Research at First Capital Equities Limited while talking to The Nation said that We think SBP is waiting for the announcement of July inflation numbers. The Federal Bureau of Statistics is scheduled to release inflation data on Aug 10. CPI numbers are likely to show declining trend in coming months. We expect July 2009 CPI to be around 11.6 per cent which would pave the way for Central Bank to aggressively cut the discount rate. We reiterate our assumption of 150bps cut in discount rate from current level of 14 per cent in the upcoming monetary policy statement, he added. Meanwhile, JS Research in its report mentioned that around 150bps cut is expected to be slashed in DR in the upcoming policy on the pre-condition of continuation of IMF programme and another $4b standby agreement. Since the last policy statement, inflation came down from 19.7 per cent in March to 13.13 per cent in June. The month-over-month trend for the past three months is 0.88 per cent compared to 2.61 per cent in corresponding quarter of last year. Thus, inflation for FY10 is envisaged at 8-9 per cent. Report says overall deficit for the 4QFY09 came in at $842m, compared to $4.17b in the corresponding quarter last year; a significant improvement from last year is definitely highlighting a reversal in external imbalance. Deficit for the full year came in at 4.3 per cent compared to 7.4 per cent last year, a significant improvement from last year, has taken the pressure off from inter-bank rate. The burden on inter-bank borrowing will be offset through external flows in FY10. M2 growth remained depressive for the most part of the year and has picked up in the 4QFY09. In the first three quarters, M2 was reported at 2.0 per cent (or Rs94b). However, since April 11th, overall Rs222 billion worth money supply was generated. This has a great impact on deposit base and debt market especially in the absence of credit off take. Reserve money is depicting a substantial slowdown primarily on account of significant contraction in NFA. However, the contraction has improved from Rs282b in March to Rs196b on June 20th, highlighting the stability in the rupee exchange rate. Therefore, moderated reserve money growth is anticipated in the absence of government borrowing from IMF.