The State Bank of Pakistan (SBP) has announced a 100 basis point cut in its policy rate, bringing the rate to 12 percent on Monday, citing improved inflation outlook and positive trends in exports and remittances.
The rate cut is the latest in a series of cuts since June 2024, bringing the cumulative drop to 1,000 bps over six intervals.
The central bank’s move is in line with widespread expectations among financial analysts and follows the government’s recent reduction in government bond yields.
Addressing a press conference after the Monetary Policy Committee (MPC) meeting, SBP Governor Jameel Ahmed stressed that the decision was taken with caution. “While inflation numbers are set to ease next month, core inflation remains a concern,” he noted.
Ahmed added that remittances and export growth were strong, supporting the current account position. The government’s treasury auction last week also signaled expectations of a rate cut, as interest rates on the 12-month maturity were reduced to 11.38pc.
The SBP’s rate cut reflects optimism about economic stabilization but acknowledges persistent risks from underlying inflationary pressures. Further updates are expected in the central bank’s upcoming policy reviews.
