The State Bank of Pakistan (SBP) on Monday slashed the key policy rate by 200 basis points (bps) to 13%, marking its fifth consecutive cut as inflation continues to drop.
Last month, the central bank cut its key interest rate by 250bps to 15%, at least 0.5% more than the market expectations amid declining inflation.
The consumer price index (CPI) for November clocked in at 4.9% in line with the Monetary Policy Committee (MPC) expectations — well below the general market consensus.
“This deceleration was mainly driven by the continued decline in food inflation as well as the phasing out of the impact of the hike in gas tariffs in November 2023,” noted the MPC, adding that the core inflation, at 9.7%, is proving to be sticky, whereas inflation expectations of consumers and businesses remain volatile.
Pakistan’s latest move makes this year’s cuts the most aggressive among emerging market central banks in the current easing cycle, barring outliers such as Argentina.
The committee, which met today, also noted that the current account remained in surplus for the third consecutive month in October 2024 which helped increase the forex reserves to around $12 billion.
