Central Bank says nothing new

Dunya Executive - - COMMENTARY -

The Monetary Policy Committee of the Central Bank kept the overnight borrowing and the weekly repo auction rate fixed, while the interest rate applied when lending through the late liquidity window increased to 11,75 percent from 11 percent. The Central Bank has been already “keeping” the late liquidity window, which is normally hardly resorted to, “open” while funding market and thus, in a sense forced the banks to borrow from this window. With this decision, the path to be followed from now on became clearer. The Central Bank actually raised interest rates, but also kept the ability to pull down interest rates when circumstances permit in hand. The bank can start lending at night whenever it wants, so it can raise the interest to 9.25 percent or even lower the interest rate to 8 percent through weekly repo auction.

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