Pakistan Central Bank Likely to Resume Monetary Easing Amid Improved Economic Outlook

Karachi: The State Bank of Pakistan (SBP) is expected to resume its monetary easing policy following a brief pause, as geopolitical tensions ease and focus shifts toward enhancing macroeconomic indicators, according to a recent analysis by AKD Securities Limited. The report anticipates a reduction in the policy rate by 50 basis points to 10.5%, with further easing projected throughout the remainder of the calendar year 2025.

The projection estimates real interest rates at 8.5% for July 2025, with a continued rate above 6.0% based on a 12-month forward inflation forecast. The analysis suggests that the easing of inflation is likely to support the SBP’s decision to adjust its monetary policy.

Inflation is forecasted to decline to 2.5% year-on-year in July 2025, a reduction from 3.2% year-on-year in the preceding month. This decrease is attributed to a drop in the Food and Housing indices, key components of the inflation calculation.

AKD Securities Limited’s report indicates that the Monetary Policy Committee (MPC) is expected to consider these factors in its upcoming meetings, potentially leading to an additional 100 basis points of easing over the course of the year.

The anticipated policy adjustments by the SBP come as the country navigates a changing economic landscape, aiming to reinforce stability and growth by addressing inflationary pressures and interest rates.