KARACHI: The State Bank of Pakistan (SBP) has announced a 1% reduction in the interest rate, bringing it down from 20.5% to 19.5%.
This decision was made during a meeting of the Monetary Policy Committee (MPC) held on Monday, as revealed by the governor of the State Bank, Jameel Ahmed. The reduction comes in response to the continuously decreasing inflation rate, according to the SBP’s latest assessment.
Governor Ahmed said the interest rates and economic indicators will be reviewed again in September. He said the domestic foreign exchange reserves were stable, and the foreign exchange reserves were improving despite external payments.
The move is aimed at stimulating economic activity by making borrowing more affordable for businesses and consumers. The Governor of the State Bank emphasized that the central bank remains vigilant and is committed to taking necessary measures to maintain economic stability and support growth.
Anticipation was high as analysts had predicted a possible reduction in the interest rate, expected to be between one and 1.5%. This potential cut aimed to stimulate economic growth and ease the financial burden on businesses and consumers amid challenging economic conditions.
The MPC meeting assesses the current economic landscape, inflation rates, and other key economic indicators before reaching its decision. Following the meeting, Governor Jameel Ahmed addressed the press to detail the committee’s conclusions and the resulting monetary policy adjustments.
On June 10, the State Bank Monetary Policy Committee (MPC) had reduced the policy rate by 150 bps to 20.5%, effective from June 11. The MPC noted that while the significant decline in inflation since February was broadly in line with expectations, the May outturn was better than anticipated earlier.
