Karachi: State Bank of Pakistan (SBP) on Monday announced a monitory policy in which interest rate has been slashed by two percent.
After decreasing of interest rate by two percent, the interest rate has turned 13 percent.
The SBP has reduced the interest rate by 200 basis points which will be implemented from tomorrow December 17.
The SBP announced the monitory policy after the meeting of the monitory policy committee of the SBP.
The committee meeting noted that the current account remained in surplus for the third consecutive month in October 2024 which helped increased the forex reserves to around $12 billion.
“Second, global commodity prices remained generally favourable, with positive spillovers on domestic inflation and the import bill. Third, credit to the private sector recorded a noticeable increase, broadly reflecting the impact of ease in financial conditions and banks’ efforts to meet the advances-to-deposit ratio (ADR) thresholds. Lastly, the shortfall in tax revenues from the target has widened,” it added.
The statement said that considering aforementioned developments, the MPC views the real policy rate remains appropriately positive to stabilise inflation within the target range of 5 to 7%.
The bank noted that it expected inflation to average “substantially below” its earlier forecast range of 11.5% to 13.5% in 2025.
It added that the inflation outlook was susceptible to risks, including measures to meet government revenue shortfalls as well as food inflation and increased global commodity prices.
“Inflation may remain volatile in the near term before stabilising in the target range,” the bank said.
The bank noted that “considerable efforts and additional measures” would be required for Pakistan to meet its annual revenue target, a key focus of the IMF agreement.
