THE State Bank’s monetary policy statement for the July to September period makes for confusing reading. All the caveats that peppered previous announcements are gone, and no mention is made of how key reforms in the energy and fiscal side are progressing.

There is only a cursory mention of the rapidly deteriorating trade deficit, which increased by 83pc from the corresponding period last year. Plummeting levels of FDI are merely mentioned in one phrase, but there is not a word on the causes or implications of this.

Bank lending to the private sector turned negative in this period, while government borrowing from the State Bank rose — a worrying sign for continuation of the nascent recovery in real economic activity. Yet the monetary policy statement makes no mention of it. In fact, one has to look in vain in the statement for any update on the nascent recovery being touted by the government all year, save for one bland claim that “real economic activity is expected to continue”.

On all the critical issues facing the economy the State Bank is suddenly silent. In both the May and July statements, it endorsed the idea that a recovery was under way in real economic activity, but cautioned that “challenges and vulnerabilities” remained, and further reforms were necessary for it to be sustainable.

While those statements were not exactly shining examples of lucidity, this time even minimal hints and caveats of announcements past are conspicuous by their absence. The impression one gets is that the bank is too fearful to speak at the moment, given the politically charged atmosphere in the country, and prefers to mumble its pronouncements. Some of this reticence is understandable.

These are, after all, sensitive times. But questions of credibility still linger, because it appears the bank is bartering away its hard-won autonomy without even a fight. If not, then an explanation should be furnished about why the concerns raised in earlier pronouncements have been dropped so easily this time round.

Published in Dawn, September 23rd, 2014