The State Bank of Pakistan (SBP) is scheduled to announce its monetary policy today (Thursday) for the upcoming 90 days, with expectations of a rate cut ranging between 150 and 200 basis points.
In its previous policy announcement, the central bank set the rate at 19.5 percent. The Monetary Policy Committee (MPC) is convening to determine the new rate, with analysts anticipating continued monetary easing due to a lower inflation forecast and improved external accounts.
If the MPC implements a rate cut, it will be the third consecutive reduction, following a 150 basis point cut on June 26, 2024, and a 100 basis point cut on July 29, 2024.
The expectation for a larger cut is supported by August’s inflation rate of 9.64 percent. Analysts forecast that the policy rate could decline to 14-15 percent in FY25, driven by favorable macroeconomic conditions, including a significant reduction in inflation. The business community is advocating for a more substantial rate cut of 300 to 500 basis points in response to the single-digit inflation rate.
