The State Bank of Pakistan’s Monetary Policy Committee (MPC) has made its sharpest rate cut since April 2020, reducing the key policy rate by 200 basis points to 17.5 per cent, effective September 13, 2024.
In addition, this move reflects a faster-than-expected decline in inflation, fueled by delayed energy price hikes and falling global oil and food prices.
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Despite this aggressive cut, the MPC remains cautious due to ongoing uncertainty. It highlighted the positive impact of reduced oil prices and rising foreign exchange reserves on Pakistan’s macroeconomic stability.
Furthermore, analysts had anticipated a smaller cut of 150bps, but the MPC’s action surpassed expectations.
