Please refer to DMMD Circular No.1 dated 15th August 2009, Circular No. 20 dated 5th October 2012, Circular No. 04 dated 21st March 2015, and SBP’s press release dated 24th February 2015 on “SBP’s Plan to Revisit its Interest Rate Corridor”. Following changes are announced with reference to these circulars:
1. The SBP Overnight Reverse Repo (Ceiling) rate has been decreased from 8.00% to 7.00% p.a.
2. SBP has decided to introduce a ‘Target Rate’ for overnight money market repo rate, as a new ‘Policy Rate’ to unambiguously signal SBP’s stance of monetary policy.
3. “SBP target rate” is set at 50 basis points below the ceiling rate. SBP will ensure that the money market overnight repo rate remains close to this target rate. This will be the main Policy Rate of SBP.
4. The SBP Overnight Repo (Floor) rate has been decreased from 5.50% to 5.00% p.a.
5. Hence, the Floor and Ceiling levels for the Interest Rate Corridor are 5.00% and 7.00% p.a. respectively. (i.e. width of 200bps).
6. The provisions contain in the Clause 4 of DMMD Circular No. 20 dated 5th October 2012 have been withdrawn.
7. Above changes are effective from 25th May 2015.
8. Other instructions on the subject shall, however, remain unchanged.