SBP's Baqir says moderately accommodative monetary a ‘right approach’
- "In the near term and in the absence of unforeseen developments, we see monetary policy settings remaining unchanged,” says Baqir.
The moderately accommodative monetary stance adopted by Pakistan is the ‘right approach’ in the present circumstances, said Governor State Bank of Pakistan (SBP) Reza Baqir.
Talking to CNBC on the current economic trajectory of Pakistan, Governor SBP stated: “The signal that this time we wanted to convey in our Monetary Policy Committee meeting was not only that we left the rates unchanged, we have done that in the previous meetings as well but the new element in our statement was the forward guidance that we provided, which is that in the near term and in the absence of unforeseen developments, we see monetary policy settings remaining unchanged.”
“The reason we wanted to give this guidance is that we are growing more confident that the current macroeconomic settings i.e. moderately accommodative monetary stance and continued fiscal restraint is the right approach right now to give a sense of comfort and stability to investors and equally importantly a sense of policy predictability, as you know the cost of withdrawing stimulus too soon are much higher than withdrawing it too late,” he said.
About the sectors that would contribute to the economic recovery of Pakistan SBP chief Baqir said, for the last several months' cement sales have been in the range of 20% Year on Year (YoY) growth. In November car sales posted 33% YoY growth, the manufacturing index was up 14% YoY November.
Baqir said that “these numbers point to the emerging recovery that is currently underway in Pakistan.”
Talking about the export sector, Baqir stated that Pakistan's monthly exports have now recovered to the average levels in the previous fiscal year and the momentum in the recent monthly outturns is quite encouraging about the “future outlook for export growth.”
On striking a balance between growth comeback and inflation rising the SBP governor said that currently, our output gap is negative. “There are very little if no signs of demand-driven inflation pressures and last we see no correlation between wage growth and inflation. All of this leads us to conclude that recent inflation has been supply-side due to shocks to food prices and more recently international oil prices. We, therefore, see that as temporary and for inflation expectations to remain anchored,” he said.
Comments
Comments are closed.