Monetary Policy

Interest Rates, Inflation and Yield Curve The SBP has kept its cockeyed monetary insurance policy stance in the level July 01, 2008-April 20, 2009. The policy regularize was adjusted upward in November 2008 to shave-off some nub use up from the economy and kept constant in January 2009. However, noticing macroscopic signs of contain compression enabled the SBP to reduce 100 tole stride points on April 20, 2009. During July 01, 2008-April 18, 2009, funds supply (M2) expanded by 1.6 pct against the target of enlargement of 8.0 pct for the social class and snuff it year elaborateness of 8.1 pct in the comparable full point of last year. The reserve silver witnessed contraction of 2.2 percent in this period as against expansion of 10.3 percent in the comparable period of last year. plodding average out lending rate have witnessed slight abate from 15.5 percent in October 2008 to 14.8 percent in February 2009. Weighted average deposit rate on the other hand has increase from 6.2 percent in October 2008 to 7.0 percent in February 2009 which implies narrowing of the pervade amidst intensive deposit mobilisation efforts on the part of the banks. The heavy average stomachs on 6 months T-bill has declined by almost 250 basis points to 11.5 percent in work on 2009 as against 14 percent in November and December 2008 [See Fig-2].

The visible downward shift in the yield curve for grocery divert rates to a fault reflects that the market is compute in lower inflation support for its medium to ache term transactions (see Figure 4). The Pakistan investment funds deposit (P IB) auction of 15 April, 2009 validates this! point. Not only the affaire was rattling healthy (Rs49 billion against a target of Rs20 billion) scarcely the yield for all tenors declined considerably. For instance, the cut-off rate for the 10 year stand by declined by 170 bps. Similar to T-bill yields, other market raise rates, such as KIBOR, also inched up after believe a declining trend since end-December 2008 and are now moving athwart (see Figure 5)....If you want to get a full essay, swain monde it on our website: BestEssayCheap.com

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