Karachi, November 4, 2024 – The State Bank of Pakistan (SBP) reduced its key policy rate by 250 basis points to 15% on Monday, marking its fourth consecutive rate cut amid single-digit inflation through October.
Analysts and independent economists widely anticipated further easing in the SBP’s policy meeting, with policymakers seeking to stimulate the economy as inflation cools from recent highs. Since June, the central bank has lowered the policy rate from a peak of 22% to 17.5% over three consecutive cuts, including a 200-basis-point reduction in September.
A Reuters survey revealed that all 15 participants expected a rate cut, with predictions ranging from 150 to 250 basis points, and one analyst accurately forecasting the 250-basis-point reduction.
Economic stability has improved since last summer when Pakistan narrowly avoided default, thanks to an IMF emergency bailout. In September, the IMF approved a long-awaited $7 billion facility, acknowledging Pakistan’s steps toward economic stabilization under the 2023-24 standby arrangement.
Although inflation has significantly decreased from a peak of nearly 40% in May 2023, analysts suggest additional rate cuts are essential for sustained economic growth.
The IMF’s October report projects Pakistan’s GDP growth at 3.2% for the fiscal year ending June 2025, up from 2.4% in fiscal 2024, reflecting a gradual economic recovery.
