The State Bank of Pakistan (SBP) on Friday announced the monetary policy for the next two months and decided to reduce the interest rate by 50 basis points bringing it to 10 per cent.

The State Bank of Pakistan (SBP) released its monetary policy statement for the subsequent two months on October.On the basis of the monetary indicators and last monetary policy decision, most of the analysts and economists believed that the State Bank would not announce any significant change in the October-November 2012 policy review.
However, at the same time, the experts were also anticipating a 50 basis points cut in the interest rates by the board of directors of the central bank with a view to enhance the growth of private sector credit off-take, a benchmark to assess the scale of private investment, in the economy.
The State Bank had slashed its benchmark interest rate by 150 basis points to 10.5 percent for August-September amid reviving private sector credit and investment growth.
This was the first discount rate cut since November 2011. Earlier the central bank had placed the discount rate on hold for the fourth consecutive monetary policy review.
The government raised Rs37 billion through an auction of PIBs. The highest amount of Rs15 billion was invested in the five-year PIBs at 11.1744 cutoff yield against the yield of 11.5520.
The fresh auction attracted Rs13.5 billion for the PIB of three-year tenure at a cutoff yield of 10.6252 percent, while the 10-year bond received an amount of Rs8.9 billion at 11.5996 percent cutoff yield.