Central Bank Cuts Interest Rate to 17.5% Amid Falling Inflation
The central bank slashed the interest rate by two percent to 17.5% in the monetary policy announced today.
The Monetary Policy Committee (MPC) of the central bank met today to fix the policy rate for the next one and a half months.
Analysts were expecting that the committee will continue monetary easing between 150-200bps on a lower inflation outlook.
The state bank stated that the inflation went down to single digits in August at 9.64 percent. “The inflation continuously going down”.
The central bank said that the growth in the current year is likely to remain 3.5 percent.
This is the third consecutive cut in the policy rate as the bank lowered the interest rate by 150bps on June 26, 2024, and 100bps on Jul 29 this year.
Analysts expect the policy rate to come down to 14-15 percent in FY25.
The main factor supporting the anticipated rate cut is the significant decline in inflation to single digits. Additionally, both headline and core inflation rates in Pakistan have decreased.
The business community had demanded a tangible cut in the interest rate between 300 to 500 basis points because of the single-digit inflation.
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