Pakistan's Surprise: Central Bank Holds Key Rate at 12%

In a surprising hold to its monetary strategy, Pakistan's central bank maintained its key policy rate at 12%, diverging from analysts' expectations of a further cut. The decision pauses an aggressive rate reduction cycle seen since June, marking a significant move in the country's financial landscape.

Pakistan's central bank has defied expectations by maintaining its key policy rate at 12%, according to a statement released on Monday. This unexpected decision halts a sequence of rate cuts that have been ongoing since last June.

Out of 14 analysts surveyed by Reuters, ten predicted a rate cut, while the remaining four correctly anticipated that the central bank would keep the rate steady.

Since June 2024, the central bank has executed a substantial monetary easing strategy, slashing rates by 1,000 basis points from a record high of 22%. This strategic move ranks among the most aggressive cuts made by central banks in emerging markets, surpassing its previous reduction of 625 basis points during the COVID-19 pandemic in 2020.

(With inputs from agencies.)