islamabad
\nThe State Bank of Pakistan (SBP) cut its key policy rate by 100 basis points to 12% on Monday, central bank governor Jameel Ahmed told reporters, for a sixth straight reduction since June as the country attempts to revive business and economic sentiment amid easing inflation.
\nThe bank\u2019s governor said at a press conference that the inflation rate would ease further in January but noted core inflation remained elevated, adding that the forecast for full-year inflation in the year to June was an average of 5.5%-7.5%.
\n\u201cConsidering these developments and evolving risks, the committee viewed that a cautious monetary policy stance is needed to ensure price stability, which is essential for sustainable economic growth,\u201d the bank\u2019s Monetary Policy Committee (MPC) said in a statement accompanying the decision.
\n\u201cIn this regard, the MPC assessed that the real policy rate needs to remain adequately positive on a forward-looking basis to stabilise inflation in the target range of 5\u20137%,\u201d the statement said.
\nThe central bank has been reducing interest rates since June 2024, slashing a total of 1,000 basis points from the record high of 22%.
\nThis marks one of the most aggressive rate-cutting campaigns among emerging markets, surpassing the 625 basis points cut during the COVID-19 pandemic in 2020.
\nSignificant reduction
\nThe committee said the impact of this significant reduction in the rate since June 2024 will continue to unfold and further support economic activity.
\nThe inflation continued to trend downward in line with expectations, reaching 4.1% year-on-year in December, the committee noted.
\n\u201cThis trend is driven by moderate domestic demand conditions and supportive supply-side dynamics, amidst favorable base effect,\u201d the SBP said in its statement.
\nConsumer inflation rate slowed to an over 6-1\/2-year low of 4.1% in December, largely due to a high year-ago base.
\nThat was below the government\u2019s forecast and significantly lower than a multi-decade high of around 40% in May 2023.
\n\u201cAt the same time, high frequency indicators continued to show gradual improvement in economic activity,\u201d it added.
\nGDP growth forecast
\nThe governor said the bank maintained its forecast of full-year GDP growth at 2.5%-3.5% and said economic growth would pick up in the next six months, which would help boost the country\u2019s previously struggling foreign exchange reserves.
\n\u201cThe improved current account outlook, along with the expected realisation of planned financial inflows, is likely to increase the SBP\u2019s foreign exchange reserves beyond $13 billion by June 2025,\u201d the bank\u2019s statement said.
\nHowever the SBP also highlighted several risks for inflation, including protectionist policies by \u201cmajor economies\u201d.
\nUnited States President Donald Trump has said he is considering imposing tariffs on goods from several countries.
\nIMF and debt servicing
\nTo a question, the governor said all actions required by the International Monetary Fund (IMF) from the central bank\u2019s side have already been taken and they are confident that the Fund\u2019s review will go as planned.
\nSBP governor also mentioned that $7.3 billion in debt repayments had already been rolled over this fiscal year to date and emphasised that any further changes in policy would not have a major impact on the government\u2019s debt servicing.
\nResponding to another query, he also ruled out any concern about the exchange rate for now.
\nAhmed stated that once the InvestPak platform is launched, the general public and corporate firms will be able to buy government securities directly.
\nPakistan\u2019s economy grew by 0.92% in the first quarter of the fiscal year 2024-25 which ends in June, according to data approved by the National Accounts Committee, and released by its Statistics Bureau in December.
\nThe committee noted: \u201cFirst, real GDP growth in Q1-FY25 turned out slightly lower than the MPC\u2019s earlier expectations. Second, the current account remained in surplus in December 2024, though the SBP\u2019s foreign exchange reserves declined amidst low financial inflows and high debt repayments.\u201d
\n\u201cThird, despite a substantial increase in December, tax revenues remained below target in H1-FY25. Fourth, global oil prices have exhibited heightened volatility over the past few weeks.
\n\u201cAnd lastly, the global economic policy environment has become more uncertain, prompting central banks to adopt a cautious approach,\u201d the statement said<\/p>\n","protected":false},"excerpt":{"rendered":"
islamabad The State Bank of Pakistan (SBP) cut its key policy rate by 100 basis points to 12% on Monday, central bank governor Jameel Ahmed told reporters, for a sixth straight reduction since June as the country attempts to revive business and economic sentiment amid easing inflation. The bank\u2019s governor said at a press conference …<\/p>\n","protected":false},"author":4,"featured_media":76174,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-76162","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\/76162","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=76162"}],"version-history":[{"count":1,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/76162\/revisions"}],"predecessor-version":[{"id":76177,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/76162\/revisions\/76177"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media\/76174"}],"wp:attachment":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media?parent=76162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/categories?post=76162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/tags?post=76162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}