January 15, 2006	Sunday	Zilhaj 14, 1426

KARACHI, Jan 14: The newly-appointed Governor of the State Bank of Pakistan, Dr Shamshad Akhtar, has said that she sees no need to change the current policy mix. She asserted that the guiding principle will continue to be the reforms process.

In the very first appearance before the media on Saturday, Dr Akhtar said that she was comfortable with the existing policies of the central bank and expressed the hope that measures taken to bring down food inflation would improve the situation further.

Answering a question the governor said that she needed time to be able to develop understanding of the situation and working of the SBP.

In reply to another query if she considers the government instructions regarding tight monetary policy to contain inflation as interference in the SBP affairs, she said that governments everywhere provided policy guidelines and there was nothing unusual about it. In a high-level meeting on Friday, Prime Minister Shaukat Aziz was reported to have asked the central bank to maintain a balance between growth and inflation.

“I don’t think it is interference. The central bank is completely independent in formulating the monetary policy,” she said, adding that the monetary policy was integral part of the whole fiscal and economic system of the country and it was necessary to maintain adequate interaction with the economic team of the government.

Dr Akhtar said that the inflation was coming down as the higher supply of food brought down the prices causing a decline in the inflation.

The inflation target is eight per cent for the current year while the next year target is six per cent. Some analysts were of the view that the higher monetary growth would not allow the SBP to keep check inflation and maintain six per cent inflation. At least for the last two years, the monetary growth increased with an average of 19 per cent. They said the half year monetary growth might hit again the same level.

Dr Akhtar said that the central bank provided broad guidelines for banks and it would be ensured that the banks were following the vision and guidelines.

She said the new monetary policy would be announced on January 26, 2006. She said that the banks’ exposure to the share market required effective review. However, she wanted to develop long-term debt market in the country.

She expressed her commitment that reforms in the banking sector would continue and the banks would be taken into confidence on the issue of reforms and policies.