The Monetary Policy Committee of the State Bank of Pakistan on Monday reduced the key policy rate by 250 basis points to 15 percent, surprising the analysts who predicted 50 basis point cut.
“In today’s meeting, the Monetary Policy Committee decided to reduce the policy rate by 250 basis points to 15 percent, effective November 5, 2024,” the MPC announced.
According to figures from the Pakistan Bureau of Statistics (PBS), headline inflation in Pakistan was 7.2% year over year in October 2024, which was marginally higher than the 6.9% reading in September 2024.
Inflation has reduced much faster than expected, close to reaching its medium-term target range of between 6 percent and 8 percent as early as October.
In earlier meeting on September 12, the MPC had cut its most substantial interest rate cute since April 2020 by decreasing 200 basis points to 17.5%.
Despite these adjustments, the drag in the economy, as well as the radical overhauling under an IMF bailout package, is the major challenge.
On the other hand, Pakistan posted a current account surplus of $119 million for September, its second consecutive monthly surplus and the biggest since March 2024.
