KARACHI: The State Bank of Pakistan cut its key discount rate to 8 percent from 8.5 percent on Saturday, citing a continuing fall in inflation and an improving economy.
Analysts had been hoping for a cut, following a drop in inflation triggered by lower oil prices, even though the State Bank of Pakistan cut the rate by one percentage point at its last meeting in January.
“An increasing number of economic indicators in the current fiscal year have moved in a favourable direction,” the bank said in a statement.
“Headline consumer price inflation continues to follow a downward trajectory and is expected to be well below the annual target of 8 percent.”
It projected an inflation rate of between 4 and 5 percent for the full calendar year.
“At the same time, the GDP growth is on course to surpass the FY 14 outcome. Owing to recent foreign exchange inflows and lower oil price, the external sector outlook continues to improve.”
The government is under pressure to do more to revive the economy, solve crippling power shortages and create favourable conditions for badly needed foreign investment.
The rate cut takes effect on Monday.
