Logo of the State Bank of Pakistan is pictured on a reception desk at the head office in Karachi.
Credit: Reuters File Photo
Islamabad: The Pakistan central bank on Monday cut its key policy rate by 250 basis points (bps) to 15 per cent from 17.5 per cent amid decline in inflation.
The State Bank of Pakistan (SBP) announced that its Monetary Policy Committee (MPC) made the decision after evaluating the economic situation.
"At its meeting today, the MPC decided to cut the policy rate by 250 basis points to 15 per cent, effective from November 5, 2024," the bank said in a statement, adding that the committee noted that "inflation has declined faster than expected and has reached close to its medium-term target range in October".
It highlighted a "sharp decline in food inflation, favourable global oil prices and absence of expected adjustments in gas tariffs and PDL rates".
Inflation numbers for October were recorded at 7.2 per cent. The headline inflation, measured by the Consumer Price Index (CPI), had slowed to 9.6 per cent in August, the first single-digit reading in more than three years.
Inflation crossed 10 per cent in November 2021 and remained in double digits for 33 consecutive months until July 2024. In between, it peaked at 38 per cent in May 2023.
The SBP in order to counter inflationary pressure had gradually raised its policy rate from 7 per cent in August 2021 to a peak of 22 per cent by April 2023. Since then, the rate has been lowered to 15 per cent.
It is believed that the lowering of policy rate will help businesses to get loans at cheaper rates and help to revive economic growth.