The State Bank of Pakistan (SBP) has reduced the interest rate by 200 basis points, bringing it down to 17.5 per cent.
The decision regarding reduction in policy rate was made after the inflation rate slowed in the country.
The Monetary Policy Committee (MPC) observed that the continued ease in inflationary pressures and the policy rate cuts will support the growth in Pakistan’s key sectors.
Interestingly, this marks the third consecutive reduction in key policy rate, followed by a 150 bps cut in June and another 100 bps reduction in July.
“At its meeting today, the MPC decided to cut the policy rate by 200bps to 17.5 per cent, effective from September 13, 2024,” the central bank said in a statement.
“Both headline and core inflation fell sharply over the past two months. The pace of this disinflation has somewhat exceeded the MPC’s earlier expectations, mainly due to the delay in the implementation of planned increases in administered energy prices and favourable movement in global oil and food prices.”
The MPC was of the view that the global macroeconomic environment has turned favourable amid the substantial softening of crude oil prices.
