Karachi – 05 May 2025:
The State Bank of Pakistan (SBP) has reduced its key policy interest rate by 1%, bringing it down from 12% to 11%, as announced in the latest Monetary Policy Committee (MPC) meeting held on Monday.
According to the SBP, this decision was driven by improved inflation trends, which now reflect a more favorable outlook than previously projected. The central bank noted that recent data shows a continued decline in inflationary pressures, encouraging room for policy easing while still maintaining macroeconomic stability.
The Monetary Policy Committee (MPC) emphasized that while easing has begun, the central bank will maintain a cautious monetary stance to ensure that inflation remains on a downward path and to avoid any abrupt policy reversals in the future.
In addition, the SBP expressed optimism about the country’s external position, highlighting expectations that foreign exchange reserves could rise to $14 billion by June 2025. This projection is seen as a sign of improving economic fundamentals and growing confidence from international financial institutions.
The MPC also welcomed recent legislative reforms aimed at increasing the collection of agricultural income tax, calling it a positive step toward improving fiscal sustainability and broadening the tax base. The move is expected to support long-term economic growth and reduce dependency on indirect taxation.
This rate cut marks a significant step in Pakistan’s monetary policy strategy, balancing between supporting growth and controlling inflation, especially as the country prepares for a new fiscal year.
