KARACHI Mar 2 Pakistan a central bank Tuesday reduced commercial bank Intereat rates from 22 to 19 per cent to increase the flow of credit to the private sector, reports AFP

The State Bank of Pakistan ISBP) also lowered Its lending rate to commercial banks from 17 per cent to 15 per cent and cut the liquidity ratio by five per cent down from 35 per cent of the reserves to 30 per cent

SBP Governor Mohammad Yaqub announcing the deci •tons at a news conference, said that the measures were resigned to reduce the cost of borrowing and to enhance credit flow to the private sec tor

His announcement gave an immediate boost to Pakistan's premier Karachi Stock Exchange (KSE).

The KSE 100- index surged by 44 points at 2501.73. dealers said, forecasting further a rise as the rate cut would reduce the cost of production of many loss Incurring companies listed on the stock exchange.

Yaqub described the measures as "fruits" of autonomy given to the central bank by

the government through a bill enacted by the parliament last month.

The set extended independence to SBP In regulating and supervising national monetary and credit system

The SBP has also tried to reduce the spread between maximum and minimum lending rates by raising minimum lending from 11 to 12 per cent, the governor said.

Yaqub. a former International Monetary Fund executive, said the decisions have the approval" of Prime Minister Benazir Bhutto

He said the present government s "determined efforts . to contain expenditures' have helped reduce government borrowing from banks

This, coupled with tight monetary policy, reduced domestic bank credit growth to five per cent during July 1993 to February 10 1994 period. , compared to 19 per cent dur^J Ing the corresponding period of the previous fiscal year, he said

The money supply has been restricted to 9.6 per cent compared with 16 4 per cent last year. Yaqub said.