Govt policies not supportive for macroeconomic imbalances: SBP
KARACHI: The Governor, State Bank of Pakistan, Shahid H. Kardar has said that the future strategy to control inflation must include coordinated and timely response to changing macroeconomic conditions.
It should include a concerted effort to raise the productive capacity of the economy, SBP Chief said in a meeting with members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) here at Federation House on Monday.
Responding to various queries regarding monetary policy, he said monetary policy has played its part in correcting the macroeconomic imbalances but other government policies have not been that supportive. Had the SBP not responded, the inflation outlook and reserve position of the country would have been worse. Shahid Kardar stressed that any delay in implementing such a strategy would only make the policy trade-offs much more difficult resulting in continuing uncertainty regarding desirable economic outcomes. Kardar explained that the growth in broad money and thus inflation would have been much higher if the private sector had also continued to borrow unchecked from the banking system along with the public sector. He said some observers can comment that availability of cheap credit to the private sector would have supplemented productive capacity, helping reduce the output gap but given the deterioration in the law and order conditions and energy sector problems in the last three years, it is highly unlikely that investments in the country, by both local and foreign investors, would have grown rapidly. He explained that what we have learned about the dynamics of inflation in Pakistan is that in broad terms, inflationary pressures have been a mix of upward adjustments in administrated prices, a persistence of output gap and inconsistent macroeconomic policies negatively influencing expectations of inflation. -PB News
ISLAMABAD: Prime Minister Syed Yusuf Raza Gilani coming for addressing at National Defence University on “My Vision of Future Pakistan”. -App