State Bank of Pakistan Cuts Interest Rates Amid Declining Inflation

Karachi: The State Bank of Pakistan (SBP) announced a surprising 100 basis point reduction in the policy rate, bringing it down to 11 percent. This move, driven by decreasing inflation, marks the seventh rate cut in the current monetary easing cycle and brings the total reduction to 1,100 basis points from a peak of 22 percent.

During a post-monetary policy briefing, the SBP Governor highlighted improvements in key economic indicators and external sector sustainability. While the SBP’s foreign exchange reserves have seen year-on-year improvements, a decline has been observed in recent months due to debt repayments.

The central bank is optimistic about the future, citing robust remittances, improved exports, and expected inflows that could help the SBP’s foreign exchange reserves reach approximately $14 billion by June 2025. Additionally, the Monetary Policy Committee projects that the current account will remain in surplus throughout the fiscal year 2025.