| GEO Business|
| SBP hikes discount rate by 50 basis points|
| Updated at: 1751 PST, Friday, July 30, 2010|
KARACHI: The central bank, tightening the monetary policy Friday, ratcheted up the discount rate by 50 basis points or 0.5 percent to 13 percent with effect from August 2.
Acting Governor State Bank of Pakistan (SBP) Yasin Anwar made the announcement while briefing the media men on the monetary measures being taken for the next two months.
He said the rate of interest is being hiked from 12.5 percent to 13 percent with effect from August 2, 2010 while the rate of inflation will remain between 11 to 12 percent during the current fiscal.
Yasin Anwar said keeping fiscal deficit at 4 percent of GDP would be a challenge.
Inflation is likely to remain higher than the targeted figure in the fiscal 2010, he said, adding, in previous fiscal the rate of inflation was 2.7 percent above the target.
The State Bank of Pakistan had kept the rate unchanged at 12.5 percent on May 24.
The SBP Acting Governor said the foreign investment has been witnessing decline over the past three years.
He pointed out the foreign assets of banks have increased to Rs152 in the past one year.