The State Bank of Pakistan (SBP) will announce its monetary policy on Monday (today) and interest rates will likely be cut.
The Bank Negara Monetary Policy Committee meeting will be held today. After that, the central bank will announce the monetary policy through a press release. Currently, the maximum interest rate is 22 percent.
The Monetary Policy Committee (MPC) of the State Bank of Pakistan has decided to maintain the policy at 22%, citing a significant improvement in inflation and external positions due to macroeconomic stabilization measures. Despite these gains, inflation remains high and geopolitical uncertainties, global commodity price volatility and upcoming fiscal measures pose risks to the inflation outlook. The MPC aims to reduce inflation to 5-7% by September 2025.
Since the last meeting, key developments include moderate economic recovery with agricultural growth of 6.8% and a current account surplus of $619 million in March 2024. Exports are growing steadily while imports are decreasing, stabilizing foreign exchange reserves. Fiscal consolidation raised the primary surplus to 1.8% of GDP, but interest payments increased due to high borrowing.
Broad money growth reached 17.1% in March 2024, driven by higher foreign assets and government borrowing, while private sector borrowing slowed. Inflation eased to 20.7% in March from 23.1% in March, driven by tighter monetary and fiscal policies, lower global commodity prices and increased food supplies. The MPC has emphasized maintaining the current policy stance to ensure a sustained decline in inflation.
