- through of the exchange rate depreciation and adjustment in energy prices. cognizant of the building up of inflationary pressures, sbp has been pursuing a tight monetary policy stance since early 2018. however, the impact of this tightening is going to reflect in the headline inflation with a certain lag. page 2 of 10 4. at present, barring any sudden shock, the monetary policy committee ( mpc ) of sbp is of the view, as stated in the last monetary policy statement, that the adjustment related to interest rate and the exchange rate from previously accumulated imbalances has already taken place. the recent monetary policy statement has explicitly stated that the mpc decision has inbuilt the impact of following 3 important developments : first, the outlook for external financing has further strengthened with the disbursement of the first tranche associated with the imf extended fund facility, activation of the saudi oil facility, and other commitments of support from multilateral and bilateral partners ; second, the government of pakistan has passed fy20 budget that seeks to improve fiscal sustainability by focusing on revenue measures to widen the tax base. the government has also committed to cease borrowing from the sbp that would qualitatively improve the inflation outlook ; finally, on the international front, the sentiment towards emerging markets has improved as expectations of further policy rate cut in the united states have grown stronger and with all the conducive policies pakistan has the capacity to attract foreign investment. 5. as we know, the effectiveness of monetary policy critically depends on the level of financial sector development, including financial access. therefore, countries with low financial inclusion and financial development may have a weaker monetary policy transmission mechanism as opposed to countries with higher financial inclusion and developed financial markets. globally, financial inclusion is considered page 3 of 10 an effective tool for achieving sustainable and inclusive economic growth, as it is a prerequisite for equitable distribution of the economic opportunities, poverty reduction, and financial stability. pakistan is committed towards broadening access to financial services and implementing development finance reforms and policies that can empower individuals and firms to access a well - functioning financial system, which cultivates opportunities for enhanced socio - economic outcomes, improved livelihoods and protection against economic shocks. the stated vision for financial inclusion in pakistan is to improve the access and usage of quality financial services among individuals and firms, with dignity and fairness. 6. with this vision, and being cognizant of high financial exclusion in the country

one year earlier, and almost 30 per cent lower than in 1995. in addition to low external price inflation for these goods, lower tariffs for clothing have translated into lower consumer prices. the removal of quota regulations has also led to a shift in clothing imports away from high - cost countries to countries with considerably lower production costs. the same trend has been observed for the audiovisual industry. since the mid - 1990s, prices for audiovisual equipment have fallen markedly. in october, prices for these goods were 8. 5 per cent lower than one year earlier. international producers have moved production to low - cost countries, allowing them to reduce prices charged to norwegian importers. in addition, new technology and intensified international competition have exerted downward pressure on prices. global economic growth has been considerably weaker than expected. changes in the economic outlook are clearly reflected in interest rate expectations. in the us, these expectations have been adjusted downwards considerably since summer 2002. at that time, market participants expected the key rate in the us to be increased to about 4 per cent towards the end of 2003. now, interest rates are believed to have reached their lowest level and are expected to remain at 1 per cent until the end of 2003, with only a gradual rise thereafter. interest rates were also expected to increase markedly in europe in summer 2002. instead, interest rates were also reduced here and expectations were revised downwards substantially. the lower projections for growth reflect the effect on the world economy of a number of negative shocks, such as the war in iraq and the sars outbreak. it may have taken longer than first expected to correct imbalances generated by overoptimism in sectors such as the it industry. high oil prices may also have contributed to restraining growth. the combination of low international interest rates and weak cyclical developments contributed to high interest rate differentials against the krone and the strong exchange rate. activity in the global economy has picked up from the low level prevailing last winter, primarily reflecting high growth in the us and some asian economies, including japan. recent statistics show that the annual rate of gdp growth in the us was 7. 2 per cent in the third quarter of 2003. strong growth in private consumption and a rise in business investment are evidence of a gradual and broadbased upturn. employment figures are also showing a positive trend and unemployment is falling. following the meetings of the open market committee in august, september and october, the federal reserve stated that there is a risk of a further and undes