Contractionary policy stance would discourage local investors to participate in various mega projects particularly infrastructure development under CPEC.
He further stated that revival in the growth of industry and services is essential to sustain economic growth which after many years is showing increasing trend. Current increase in policy rate 6 to 6.5 percent will add pressure on the economy to emerge.
Bilour emphasized that under the improving business environment- efforts by the Government, SBP may need to play its vital role by adopting expansionary stance to create opportunities for the local businesses and their participation in the economic activities.
The high policy rate regime along with rupee depreciation adversely affects the intermediate and capital goods sectors.
Ghazanfar Bilour further added that the current increasing trend in policy rate ahead of interim government would attract the multidisciplinary in-depth impacts. It is apprehended that beside inflation, the other motive would be financial support to the interim government through generation of funds by enhancing half percent difference in policy rate. However, the policy rate may need to specifically stabilize during the current era to pose the political and financial stability.
Published in Daily Times, May 29th 2018.
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