The State Bank of Pakistan (SBP) has lowered its key policy rate by 100 basis points, reducing it to 12 per cent, citing an improved inflation outlook alongside positive trends in exports and remittances.
This latest cut marks the sixth reduction since June 2024, bringing the cumulative decrease to 1,000 basis points. The decision aligns with analysts’ predictions and follows the government’s recent move to lower treasury bill yields.
During a press conference following the Monetary Policy Committee (MPC) meeting, SBP Governor Jameel Ahmed highlighted the cautious approach behind the decision. “While inflation figures are set to decline next month, core inflation remains a concern,” he stated.
Ahmed further noted robust growth in remittances and exports, which are bolstering the current account position. Additionally, last week’s T-bill auction reflected expectations of a rate cut, with yields on the 12-month tenor reduced to 11.38 per cent.
The rate cut signals optimism about economic stabilisation but underscores ongoing challenges with core inflation. Updates on policy direction are expected in the SBP’s forthcoming reviews.
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