The State Bank of Pakistan (SBP) announced a reduction in its key policy rate in 100 basic points, carrying the interest rate to 12 percent on Monday, citing a better perspective of inflation and positive trends in exports and remittances.
The type cut is the last of a series of reductions since June 2024, which raises the accumulated decrease to 1,000 basic points in six intervals.
The measure of the Central Bank is aligned with generalized expectations among financial analysts and continues to the recent reduction of the yields of the Treasury letters by the Government.
The Governor of the SBP, Jameel Ahmed, at a press conference after the meeting of the Monetary Policy Committee (MPC), emphasized that the decision was made cautiously. “Although inflation figures will decrease next month, basic inflation remains a concern,” he said.
Ahmed added that remittances and exports growth were solid, which supports the current account position. The Treasury Letter Auction by the Government last week also pointed out expectations of a feature of fees, since the yields at 12 months were reduced to 11.38 percent.
The reduction of SBP rates reflects optimism on economic stabilization, but recognizes persistent risks in underlying inflationary pressures. More updates are expected in the next policy reviews of the Central Bank.
