Pakistan's Bold Monetary Shift: Central Bank Cuts Rates

Pakistan's central bank lowered its key policy rate by 100 basis points to 12%, marking the sixth reduction since June. This decisive move aims to boost economic and business sentiment amidst easing inflation. Fourteen out of fifteen analysts predicted this reduction, reflecting a broader trend in emerging markets.

Pakistan's central bank made a strategic decision on Monday, cutting its key policy rate by 100 basis points to an updated rate of 12% as announced by the governor during a media briefing. This marks the sixth consecutive reduction since June, as the nation seeks to stimulate business and economic sentiment amid a context of easing inflation.

A survey conducted by Reuters revealed that fourteen out of fifteen economists had forecasted the central bank's decision to slash its key rate by at least 100 basis points. Such consistent predictions highlight the visibility and expected nature of this policy move within financial circles.

The State Bank of Pakistan has now reduced rates by a substantial 1,000 basis points, down from a record high of 22% in June 2024. This aggressive monetary policy move ranks among the most assertive actions by central banks in emerging markets, exceeding the 625 basis points in rate cuts implemented during the 2020 COVID-19 pandemic.

(With inputs from agencies.)