The MPC, according to the central bank, opined that the move would help dampen the economic impact of the COVID-19 pandemic, which is expected to hit growth and employment.
It would do so by "easing borrowing costs and the debt service burden of households and firms, while also maintaining financial stability" and making sure "economic activity is better placed to recover when the pandemic subsides.
The SBP said its committee "remains ready to take whatever further actions become necessary in response to the evolving economic impact of the Coronavirus".
It also noted that the global economy would experience its "sharpest downturn since the Great Depression", shrinking as much as 3% in 2020, as per the International Monetary Fund's (IMF) projections. To understand the severity, the impact during the 2008 financial crisis was 0.07% contraction.
It said it had taken into account a reduction in international oil prices, as well as a suggestion via futures markets that the "low prices will persist
According to the central bank, the domestic economy was likely to decline 1.5% in ongoing fiscal year before returning to 2% growth next year. "Inflation is expected to be close to the lower end of the previously announced 11-12% range this fiscal year, and to fall to 7-9% range next fiscal year," it mentioned.
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