State Bank of Pakistan slashes key policy rate by 250bps to 15pc

Karachi: The State Bank of Pakistan (SBP) on Monday announced a reduction in its key policy rate by 250 basis points (bps) to 15 per cent from 17.5pc.

“At its meeting today, the Monetary Policy Committee (MPC) decided to cut the policy rate by 250 basis points to 15 per cent, effective from November 5, 2024,” the SPB said in a statement.

The Committee noted that “inflation has declined faster than expected and has reached close to its medium-term target range in October”.

“The Committee noted that inflation has declined faster than expected and has reached close to its medium-term target range in October.”

1/3 The Monetary Policy Committee (MPC) decided to reduce the policy rate by 200 bps to 17.5 per cent in its meeting today.https://t.co/bOJO6H5tPb#SBPMonetaryPolicy pic.twitter.com/4oGElYWVPa

— SBP (@StateBank_Pak) September 12, 2024

The Committee assessed that the tight monetary policy stance continues to play an important role in sustaining the downward trend in inflation.

“Moreover, a sharp decline in food inflation, favourable global oil prices and absence of expected adjustments in gas tariffs and PDL rates have accelerated the pace of disinflation in recent months.

Pakistan has reduced interest rates by 700 bps since June in four consecutive cuts.

The State Bank of Pakistan (SBP) justified the rate cut, stating that the current monetary policy stance is suitable to achieve price stability and maintain inflation within the 5-7% target range.

"This will also support macroeconomic stability and help achieve economic growth on a sustainable basis," it said.

Central Bank Governor Jameel Ahmad told analysts in a briefing following the rate cut decision that bilateral partner countries have assured the International Monetary Fund (IMF) that they will continue rollovers of their debt for the duration of Islamabad's bailout program.

Additional input from Reuters