Monetary Policy


Monetary Policy Objectives
Monetary Policy and Exchange Rate Regime
Monetary Policy Instruments


  Monetary Policy Framework  
   Monetary Policy and Exchange Rate Regime

The monetary policy regime involves the choice of an appropriate intermediate target or nominal anchor to achieve the ultimate objective(s). A nominal anchor can be an economic variable that relatively quickly adjust to changes in monetary policy instruments and have a predictable relationship with the ultimate policy objectives. A well-defined nominal anchor helps a central bank to avoid discretionary monetary policy, resolves time inconsistency problem, and increases the likelihood of achieving price stability objective over a long-run.

SBP currently does not have an explicit intermediate target for any nominal variable (such as M2 growth) to achieve the ultimate objective of price stability. Rather, SBP has been seeking to control inflation by influencing aggregate demand relative to productive capacity through adjustments in the short-term interest rates. That is, the decision about the magnitude and direction of change in the policy rate is broadly based on the assessment of overall macroeconomic conditions in particular on the near-term inflation path vis-à-vis announced inflation target. Thus, in practice, inflation (and inflation forecast) implicitly serves as nominal anchor in the current monetary policy approach in Pakistan. Such an approach to monetary policy is close to inflation targeting lite regime.

Operational target of SBP’s monetary policy is to keep the overnight money market repo rate around the Policy (target) Rate. For more details see the section of Monetary Policy Implementation.

Since May 1999, SBP has been following a market determined exchange rate regime in which the value of Pakistani rupee vis-à-vis other currencies is determined in the foreign exchange market through the market forces of supply and demand. The supply and demand situation is essentially a reflection of country’s Balance of Payments position. The supply of foreign exchange mainly comes from exports, remittances, foreign loans, foreign investments, etc., while demand arises due to imports, debt payments, etc. In case, demand is higher than the supply of foreign currency, the domestic currency tends to depreciate and, vice versa.

To quell excessive volatility and to ensure smooth functioning of the foreign exchange market, the SBP occasionally intervenes in the foreign exchange market. However, the SBP does not aim to keep the exchange rate at any pre-determined level.

    SBP Policy Rate
    7.00% p.a.
    SBP Overnight
    Repo (Ceiling) Rate
    8.00% p.a.
    SBP Overnight
    Repo (Floor) Rate
    6.00% p.a.
    Overnight Weighted Average Repo Rate
    As on 22-Sep-20
    6.77% p.a.
    As on 23-Sep-20
    Tenor BID OFFER
    3-M 7.00 7.25
    6-M 7.04 7.29
    12-M 7.06 7.56

  • MTBs
    Tenor Rates
    3-M 7.1399%
    6-M 7.1800%
    12-M 7.3000%
    (as on September 09, 2020)

    PIBs (Fixed Rate)

    Tenor Rates
    3-Y 8.2000%
    5-Y 8.4400%
    10-Y 8.9900%
    15-Y Bids Rejected
    20-Y 10.5498%
    (as on Sep 16, 2020)

    PIBs (Floating Rate)

    Tenor Cut-off Price
    3-Y 100.3455
    5-Y 100.4845
    10-Y 101.0392

    (as on September 09, 2020)

  • MTB Auction


    PIB (Floating Rate) Auction
    PIB (Fixed Rate) Auction
    As on 11-Sep-20
    SBP’s Reserves
    Bank’s Reserves
    Total Reserves

    USD/PKR Rates
    As on 23-Sep-20
    Revaluation Rate
    Average Rate
    Bid: 165.9487
    Offer: 166.3233
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