6. MONETARY POLICY OF PAKISTAN
Monetary policy framework
The preamble of the SBP Act, 1956 envisages these
objectives as โ whereas it is necessary to provide for the
constitution of a state bank to regulate the monetary and
credit system of Pakistan and to foster its growth in the best
national interest with a view to securing monetary stability
and fuller utilization of the countryโs productive resources.
7. MONETARY POLICY DECISION MAKING BODY
Monetary Policy Committee is responsible and fully empowered to decide the
monetary policy stance. Section 9E of the SBP Act 1956 lays out the powers and
functions of the Monetary Policy Committee that have been mainly identified as
to:
(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.
Mr. Azam Faruque
SBP Board Member
Chairman Dr. Reza Baqir
Governor
Dr. Tariq Hassan
SBP Board Member
8. 7.25 % p.a.
HOW DOES MONETARY POLICY WORK IN PAKISTAN
SBP signals its monetary policy stance through adjustments in the policy
rate; that is, the SBP Target Rate for the overnight money market repo rate.
Changes in the policy rate impact demand in the economy through several
channels and with a lag. In the first place, changes in policy rate influence
the interest rates determined in the interbank market at which financial
institutions lend or borrow from each other. The market interest rates are
also influenced by central bank interventions in money and foreign exchange
markets as well as by its communication
SBP Policy Rate & Interest
Rate Corridor Facilities
SBP Policy Rate & Interest
Rate Corridor Facilities
SBP Policy Rate
SBP Overnight Reverse
Repo(Ceiling) Rate
8.25% p.a.
SBP Overnight Repo (Floor)
Rate
6.25% p.a.
source
Sbp.org.pk
9. MONETARY POLICY OF AUSTRALIA
Framework
Under The Reserve Bank Act of 1959, the bankโs
responsibilities include determining and implementing
monetary policy. Reserve Bank Board sets interest rates
so as to achieve the objectives set out in the Reserve
Bank Act 1959.
ใStability of the currency.
ใMaintenance of full employment.
ใEconomic prosperity and welfare of the people.
ใInflation target.
10. MONETARY POLICY DECISION
๏ต The Reserve Bank Board is responsible for formulating monetary policy. The
Reserve Bank sets the target โcash rateโ, which is the market interest rate on
overnight funds.
๏ต Since March 2020, the Reserve Bank has also set a target for the yield on 3-
year Australian Government bonds.
Philip Lowe Guy Debelle
11. HOW DOES AUSTRALIAN RESESERVE BANK
IMPLEMENT MONETARY POLICY
๏ต The Reserve Bank of Australia implements
monetary policy by undertaking transactions
in domestic money markets.
๏ต Monetary policy is implemented can be
explained by stepping through five aspects
of the cash market:
1. Price
2. Quantity
3. Demand
4. Supply and
5. Policy interest rate corridor.
1.Price
RBA lending rate
Cash Rate Target
Cash Rate Target
2. Quantity
3.Demand
4.Supply
5. Policy
interest rate
corridor
The Australian Cash Market
