THROUGHOUT the world central banks announce a monetary policy for their countries through press releases, which are normally followed by press conferences by the heads of the central bank concerned, who are assisted by fellow directors/ governors of the banks.

In Pakistan, too, the monetary policy announcement had always been made by the State Bank of Pakistan. But I was very much surprised to know the other day that the good news of reduction in the interest rate by the SBP was first released to the media by Finance Minister Ishaq Dar.

According to a media report, the SBP board of directors was still in session discussing the monetary policy when the finance minister released the news, saying that the SBP had decided to cut the interest rate.

While announcing the rate cut, the finance minister said the SBP was independent in making its decisions.

I think the announcement of the SBP’s decision by the finance minister undermines the former’s independence and authority.

The finance minister owes an explanation to his countrymen about why he announced the monetary policy before the SBP announcement.

Ejaz Ahmad Magoo

Lahore

Published in Dawn January 28th, 2015

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