Pakistan’s central bank has decided to maintain its key interest rate at 12%, focusing on stabilizing inflation and sustaining economic recovery. This follows a steep rate cut from 22% last year, part of reforms under a $7 billion IMF bailout.
Inflation fell to 1.5% in February, a sharp drop from 40% in May 2023, driven by lower food and energy prices. Despite this, the central bank remains cautious due to persistent core inflation and potential market volatility.
Many economists expected a rate cut, but the bank sees the current real interest rate as sufficient to maintain macroeconomic stability. It believes past reductions are already supporting growth, warranting a steady policy approach.
