islamabad
\nThe State Bank of Pakistan (SBP) announced on Monday that it had decided to cut the key interest rate by 100 basis points (bps) to 19.5 per cent from the previous rate of 20.5pc.
\nThe Monetary Policy Committee (MPC) statement issued by the central bank said that it had decided to cut the policy rate by 100bps to 19.5pc, effective from July 30, 2024.
\nAddressing a press conference, SBP Governor Jameel Ahmad said the central bank\u2019s MPC had met earlier today and reviewed the current economic developments, highlighting the key role of declining inflationary pressure in the decision. Furthermore, the MPC statement said that the committee had observed that the June 2024 inflation was slightly better than anticipated, adding that it also assessed that the inflationary impact of the fiscal year 2025 budgetary measures was broadly in line with earlier expectations.
\nIt also noted that the external account has continued to improve, as reflected in SBP\u2019s foreign exchange reserves \u201cdespite substantial repayments of debt and other obligations\u201d.
\nDue to these reasons, the committee \u201cviewed that there was a room to further reduce the policy rate in a calibrated manner to support economic activity, while keeping inflationary pressures in check\u201d.
\nOn positive developments, the statement said that the current account deficit had narrowed in the fiscal year 2024 and SBP\u2019s FX reserves had \u201cimproved significantly from $4.4 billion at end-June 2023 to above $9 billion\u201d.
\nFurthermore, it highlighted that the country had reached a staff level agreement with the International Monetary Fund (IMF) for a 3-year extended fund facility programme of $7bn. Regarding the inflationary outlook, the statement said that headline inflation rose to 12.6pc year-on-year in June 2024 from 11.8pc in May, driven by higher electricity tariffs and Eid-related price increases.
\nHowever, it noted that core inflation had steadied around 14pc over the past two months, highlighting that the inflationary impact of the new budget is \u201clargely in line with expectations\u201d.
\nPreviously, the headline inflation for June clocked in at 12.6pc on year-on-year, according to data from the Pakistan Bureau of Statistics (PBS).
\nEarlier, market participants had widely anticipated a rate cut given June\u2019s inflation rate of 12.6pc, significantly lower than the interest rate of 20.5pc, though opinions had varied on the extent of the reduction.<\/p>\n","protected":false},"excerpt":{"rendered":"
islamabad The State Bank of Pakistan (SBP) announced on Monday that it had decided to cut the key interest rate by 100 basis points (bps) to 19.5 per cent from the previous rate of 20.5pc. The Monetary Policy Committee (MPC) statement issued by the central bank said that it had decided to cut the policy …<\/p>\n","protected":false},"author":4,"featured_media":65360,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-68011","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/68011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/comments?post=68011"}],"version-history":[{"count":1,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/68011\/revisions"}],"predecessor-version":[{"id":68033,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/68011\/revisions\/68033"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media\/65360"}],"wp:attachment":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media?parent=68011"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/categories?post=68011"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/tags?post=68011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}