The State Bank of Pakistan (SBP) slashed the benchmark interest rate by 150 basis points to 11 percent in a bid to help businesses cope with the growing challenges posed by the coronavirus pandemic.

The decision was taken following a meeting of the Monetary Policy Committee (MPC) on March 17 which noted considerable uncertainty about how the Coronavirus outbreak would impact the global economy and Pakistan.

It said substantial new information on global and domestic developments has become available since the last MPC meeting. Globally, the Coronavirus has severely increased in reach.

This has caused major disruptions to economic activity and the IMF has also significantly downgraded its global growth outlook for 2020 from 3.3 percent growth previously to below zero. These global developments have also led to a sharp fall in international trade.

On the domestic front, since the last MPC, the number of COVID-19 cases has increased considerably, prompting social distancing and curtailment of activity. This is expected to lead to noticeable slowdown in domestic demand, the SBP said.

The developments discussed above imply that the outlook for growth and inflation in Pakistan is likely to be revised down further. In the wake of this new information, the MPC agreed at its emergency meeting today, to take further action.