The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is set to meet on Monday, January 27, 2025, to discuss and decide on the country’s monetary policy.
SBP Governor Jameel Ahmad will announce the decision in a press conference later that day.
Over the past five MPC meetings, the central bank has lowered the policy rate by a total of 900 basis points (bps) as inflation has dropped significantly. A brokerage firm predicts the SBP might cut the policy rate by another 100 bps in the upcoming meeting.
Intermarket Securities, a financial research firm, believes this potential 100 bps reduction is likely to have a mild effect on the market. They added that a smaller cut could be seen as negative by investors.
Pakistan’s headline inflation was recorded at 4.1 per cent year-on-year in December 2024, a decrease from 4.9 per cent in November, according to the Pakistan Bureau of Statistics (PBS).
In the previous MPC meeting, the SBP had lowered the policy rate by 200 bps, bringing it to 13 per cent. At that time, the committee noted that the impacts of earlier rate cuts were beginning to show, with more benefits expected in the coming quarters.
The MPC explained that the decrease in inflation was mainly due to falling food prices and the fading impact of the gas tariff hike from November 2023.
However, core inflation, which stood at 9.7 per cent, remained high, and inflation expectations among businesses and consumers continued to be unstable.
The SBP also pointed out that Pakistan’s current account had remained in surplus for the third straight month in October 2024, which helped raise foreign exchange reserves to around $12 billion.
