SBP slashes interest rate by 100 basis points

The State Bank of Pakistan (SBP) on Monday slashed policy rate by 100 basis points in the first monetary policy of 2025, ARY News reported.

“At its meeting today, the Monetary Policy Committee (MPC) decided to cut the policy rate by 100 bps to 12 percent, effective from December 17, 2024,” the SBP said in a statement.

The Monetary Policy Committee (MPC) meeting was chaired by SBP Governor Jameel Ahmad.

The announcement for the new policy rate was made by the SBP Governor Jameel Ahmed in a press conference after the MPC meeting.

The SBP chief said inflation is decreasing in Pakistan gradually and added the inflation dropped to 4.1pc in December 2024.

The inflation rate will remain between 5 to 7 per cent in FY2024-25, he added.

Mr. Jameel further said economic activities are gaining momentum in the country and the current account remained surplus with over $580mln.

Read more: Pakistan’s weekly inflation drops by 0.77 percent

The SBP governor said Pakistan is currently holding $16.19bln in its foreign reserves.

It is to be noted that the SBP has slashed the policy rate by 1000 basis points in the last eight monetary policy announcements.

Monetary policy plays a crucial role in tackling inflation and stabilizing the economy. Strategies like adjusting interest rates help regulate money supply and demand, curbing inflationary pressures.

If implemented effectively, these measures could bring down inflation, restore economic confidence, strengthen purchasing power, and foster a stable environment for sustainable growth and development.