March 24, 2020 / 2:58 PM / 17 days ago

UPDATE 2-Pakistan cuts interest rate again, announces bailout for coronavirus-hit economy

(Updates with Pakistan announcing economic relief package)

By Syed Raza Hassan

KARACHI, Pakistan, March 24 (Reuters) - Pakistan on Tuesday cut its benchmark interest rate for the second time in a week, lowering it by 150 basis points to 11%, and announced a package of measures to support the economy and poorer workers hit by the coronavirus pandemic.

Pakistan has reported 918 confirmed cases of the coronavirus and seven deaths.

Measures aimed at curbing business activity are expected to lead to a significant slowdown in domestic demand, the central bank said in a statement announcing the decision of the Monetary Policy Committee to cut the benchmark rate.

“(The central bank) noted considerable uncertainty about how the coronavirus outbreak would impact the global economy and Pakistan,” it said on Twitter.

“These developments imply that the outlook for growth and inflation in Pakistan is likely to be revised down further.”

The bank had cut its policy rate on March 17 by 75 basis points to 12.50%.

The committee said it remained ready to take whatever further action is necessary to respond to the evolving economic impact of the coronavirus.

Prime Minister Imran Khan announced measures to support the economy and poorer workers that will use up spare funds from the government’s coffers amounting to more than 1 trillion rupees ($6.3 billion).

The money - some of which has already been earmarked for the government’s planned spending - will be spent to help the export and industry sectors, tax breaks, procurement of medical and other equipment required to fight the pandemic, and the distribution of a monthly cash stipend among the poor. ($1 = 158.9000 Pakistani rupees) (Reporting by Syed Raza Hassan, Additional Reporting by Asif Shahzad in Islamabad; editing by Gareth Jones and Hugh Lawson)

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