The statement comes just days after the State Bank's Monetary Policy Committee announced to cut the policy rate by a further 200 basis points to 9 percent. This reduces forward-looking real interest rates (defined as the policy rate less expected inflation) to around zero, which is about the middle of the range across most emerging markets.

The interest rate has been reduced keeping in view the coronavirus situation in the country. The interest rate declined by 4.25 percent during one month.

Talking about the situation emerging from the coronavirus, the SBP Governor was of the view that the global lockdown implemented to curb the virus spread “has been the mother of all external shocks,” for emerging economies, because they have limited policy space to undertake expansionary policies.

Pakistan's central bank has also taken a number of steps to mitigate the impact of coronavirus on the local economy, it announced to provide loans to health facilities on 3pc markup to counter coronavirus outbreak. The SBP declared that the inflation rate will come down in the coming months while the prices of petroleum products will also decrease.

The SBP expects the economy to contract by negative 1.5pc in FY20 before recovering to around 2pc growth in FY21, due to coronavirus shock. Whereas, Inflation is expected to be close to the lower end of the previously announced 11-12 percent range this fiscal year, and to fall to 7-9 percent range next fiscal year.

Earlier, Resident Representative of International Monetary Funds (IMF) in Pakistan, Maria Teresa Daban Sanchez while commenting on the overall impacts of COVID-19 on Pakistan's economy said that there would be a significant cut in imports from Pakistan from various countries, the remittances would get reduced, tax collection would reduce considerably and the growth rate may get reduced to -1.5%.