Monetary Policy













 About Monetary Policy

Monetary policy involves central banks’ use of instruments to influence interest rates and/or money supply in the economy with the objective to keep overall prices and financial markets stable. Monetary policy is essentially a stabilization or demand management policy that cannot impact long-term growth potential of an economy. Preamble to SBP Act, 1956 envisages monetary policy to secure monetary stability and attain fuller utilization of economy’s productive resources. In SBP’s view, the best way to achieve these objectives on a sustainable basis is to keep inflation low and stable.

Low and stable inflation provides favorable conditions for sustainable growth and employment generation over time. It reduces uncertainties about future prices of goods and services and helps households and businesses to make economically important decisions such as consumption, savings and investments with more confidence. This, in turn, facilitates higher growth and creates employment opportunities over the medium term leading to overall economic well-being in the country.

In practice, SBP’s monetary policy strives to strike a balance among multiple and often competing considerations. These include: controlling inflation, ensuring payment system and financial stability, preserving foreign exchange reserves, and supporting private investment.

How does Monetary Policy Work?
SBP signals its monetary policy stance through adjustments in the policy rate; that is, the SBP Target Rate for the overnight money market repo rate. Changes in the policy rate impact demand in the economy through several channels and with a lag. In the first place, changes in policy rate influence the interest rates determined in the interbank market at which financial institutions lend or borrow from each other. The market interest rates are also influenced by central bank interventions in money and foreign exchange markets as well as by its communication.

The changes in market interest rates influence the borrowing cost for consumers and businesses as well as the return on deposits for the savers. Generally, lower interest rates encourage people to save less and consume/invest more, and vice versa. Changes in the policy rate also influence the value of financial and real assets, impacting people’s wealth and thus their spending. The adjustment in demand finally affects the general price level and thus inflation in the economy.


For more details see: Transmission Mechanism of Monetary Policy




  •  
    SBP Policy Rate
    22.00% p.a.
     
    SBP Overnight
    Reverse
    Repo (Ceiling) Rate
    23.00% p.a
     
    SBP Overnight
    Repo (Floor) Rate
    21.00% p.a.
  •  
    Weighted-average Overnight Repo Rate
    As on 27-Feb-24

    21.25% p.a.
    KIBOR
    As on 28-Feb-24
    Tenor BID OFFER
    3-M 21.54 21.79
    6-M 21.49

    21.74

    12-M 21.99 21.49
     

  • MTBs
    Tenor Rates
    3-M 21.6998%
    6-M 20.3952%
    12-M 20.3290%
    (as on Feb 21, 2024)
    Fixed-rate PIB
    Tenor Cut-off Rates
    3-Y 16.7999%
    5-Y 15.5499%
    10-Y 14.5000%
    15-Y No Bid
    20-Y No Bid
    30-Y No Bid
    (as on Feb 14, 2024)

    Floating-Rate PIBs (Quarterly Coupon)

    Tenor Cut-off Price
    2-Y No Bid Received
    3-Y No Bid Received

    Floating-Rate PIBs
    (Half-yearly Coupon)

    Tenor Cut-off Price
    5-Y 95.8557
    10-Y 93.6342
    (as on Feb 21, 2024)
    GIS FRR
    Tenor Cut-off Rental Rate/Price
    3-Y 100.2842
    5-Y 100.0022
    GIS VRR
    Tenor Cut-off Margin/Price
    3-Y 99.0800
    5-Y 98.7600
    (as on 21-Dec-2023)
  • PIB Auction
    (Fixed Rate)
    13-Mar-24


    MTB
    06-Mar-24

    Floating Rate PIB
    (Semi-Annual Coupon)


    06-Mar-24
    Floating-rate PIB
    (Quarterly Coupon)

    06-Mar-24
    GIS VRR
    Jan-24

    GIS FRR
    Jan-24

    As on 16-Feb-24
    SBP’s Reserves
    8,012.8
    Bank’s Reserves
    5,085.0
    Total Reserves
    13,097.8

  •  
    As on 28-Feb-24
     
    M2M
    Revaluation Rate
    279.1191
    Weighted
    Average Rate
    Bid: 279.0164
    Offer:

    279.4562

       
Home
About SBP
Publications
Economic Data
Press Releases
Circulars/Notifications
Laws & Regulations
Monetary Policy
Help Desk
SBP Videos
SBP Welfare Trust
Contact us
What's New?
Speeches
Online Tenders
Web Links

Educational Resources
Regulatory Returns
Library
Rupey ko Pehchano
Events
Zahid Husain Memorial Lecture
Careers
Sitemap
 
Best view Screen Resolution : 1024 * 768
Copyright © 2016. All Rights Reserved.