The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) delivered a surprise decision on Monday, announcing a reduction in the policy rate by 50 basis points (bps) to 10.5 percent. The new rate will take effect from Tuesday, December 16, 2025.
📢 Monetary Policy Committee has decided to decrease the policy rate by 50 basis points to 10.5 percent w.e.f. December 16, 2025.#SBPMonetaryPolicy
— SBP (@StateBank_Pak) December 15, 2025
The move comes as a shock to the market, as most economists and analysts widely expected the central bank to maintain the status quo at 11 percent, citing advice from international bodies like the IMF to keep the monetary policy “appropriately tight” due to persistent inflation risks.
While the SBP is yet to release a detailed statement explaining the decision, the cut suggests that the MPC has gained confidence in the country’s macroeconomic stability and the trajectory of inflation.
The State Bank of Pakistan’s surprise 50 basis point policy rate cut ends a four-meeting hold, signaling cautious easing after June’s last reduction.
Amid November inflation at 6.1% within the 5-7% target and a recent $1.4 billion IMF tranche, the move aims to stimulate growth while monitoring external pressures like the rupee’s stability.
Sectors relying on credit, such as manufacturing and housing, feel at ease.
However, the decision runs counter to the prevailing cautious sentiment, where concerns linger about the current account deficit and the possibility of renewed inflationary pressures in the coming months.
Analysts will be closely watching the SBP’s detailed Monetary Policy Statement for the rationale behind the deviation from market consensus.
The policy rate of 10.5 percent is a significant pivot, signaling the central bank’s focus on nurturing the economic recovery as the year draws to a close.
