 has announced a reduction in interest rates after four years by 150 basis points to 20.5 percent){kind=link}
The State Bank of Pakistan (SBP) has announced a reduction in interest rates after four years. The Monetary Policy Committee cut interest rates by one and a half percentage points.
The State Bank statement said that today in the Monetary Policy Committee (MPC) meeting, it has been decided to reduce the policy rate by 150 basis points to 20.5 percent.
It said that the committee noted that since February inflation was expected to decline significantly, however, the deceleration results in May were better than expected.
According to the statement, the Monetary Policy Committee also assessed that core inflationary pressures are also easing. This is reflected in the continued decline in core inflation and the softening of consumer and business inflation expectations. This situation is due to strict monetary policy and financial stability measures.
It said the Monetary Policy Committee expressed that the upcoming budget measures and changes in energy prices may add some pressure to the inflationary outlook in the near term. Despite these concerns and today’s decision, the cumulative effect of past fiscal tightening is expected to keep inflationary pressures under control.
It may be noted that the State Bank’s Monetary Policy Committee had announced an emergency meeting in June 2023 to raise the interest rate to 22 percent, which has remained in place to date.
It should be noted that this is the first time that the State Bank has announced a reduction in interest rates after almost four years of continuous hikes.
Earlier, the central bank had announced a one percent cut in interest rates in June 2020 during the Corona epidemic.