KARACHI: The State Bank of Pakistan (SBP) on Tuesday announced the constitution of the monetary policy committee (MPC) – an independent monetary policy setting – and its first meeting to be held on January 30 for policy rate announcement.
“The SBP achieves an important landmark in terms of an independent monetary policy setting,” said a statement issued by the central bank.
In November 2015, the Parliament legislated amendments in the SBP Act, 1956 establishing an independent MPC empowered to make monetary policy and its allied decisions.
Earlier, there was an advisory committee on monetary policy with the mandate to make recommendations to the board, which was entrusted with the powers to make monetary policy decisions.
The central bank said that MPC comprised of nine members including three members of the board nominated by the board itself, three external members who shall be economist and appointed by the federal government on recommendation of the board and three senior executives of the bank nominated by the governor.
The SBP governor is the chairman of the committee, the statement said.
Under section 9D of the SBP Act, members have been nominated for the committee are:
The three members of MPC from the board include Khawaja Iqbal Hassan, Muhammed Hidayatullah and Zafar Masud.
The federal government has appointed Dr. Asad Zaman and Dr. Qazi Masood Ahmed as the external members while the third position remains vacant. The external members of the MPC have been appointed for a period of three years and shall be eligible for reappointment for another term of three years.
The governor has nominated Riaz Riazuddin (Deputy Governor Policy), Saeed Ahmad (Deputy Governor, Financial Markets, IB &SI) and Jameel Ahmed (Executive Director, Financial Stability and Banking Supervision Group) as members.
The powers and functions of the MPC defines under the Act as: “The Monetary Policy Committee shall, without prejudice to its powers and functions and those of the Bank, support the general economic policies of the Federal Government and shall –
(a) formulate, support and recommend the monetary policy, including, as appropriate, decisions relating to intermediate monetary objectives, key interest rates and the supply of reserves in Pakistan and may make regulations for their implementation; (b) approve and issue the monetary policy statement and other monetary policy measures; (c) perform any other functions conferred on it by law; and (d) carry out any ancillary activities incidental to the exercise of its functions under this Act.”—Originally published in The News