The State Bank of Pakistan (SBP) has reduced the interest rate by 200 basis points, bringing it down to 17.5 per cent.
This decision to lower the policy rate follows a slowdown in the country’s inflation rate.
The Monetary Policy Committee (MPC) noted that the ongoing easing of inflationary pressures, combined with the policy rate cuts, will support growth in Pakistan’s key sectors.
This reduction marks the third consecutive cut in the key policy rate, following a 150 basis points cut in June and a further 100 basis points reduction in July.
“At its meeting today, the MPC decided to cut the policy rate by 200 bps to 17.5 percent, effective from September 13, 2024,” the central bank said in a statement.
“Both headline and core inflation fell sharply over the past two months. The pace of this disinflation has somewhat exceeded the MPC’s earlier expectations, mainly due to the delay in the implementation of planned increases in administered energy prices and favourable movement in global oil and food prices.”
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The MPC also observed that the global macroeconomic environment has improved, thanks to the substantial softening of crude oil prices.
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