Pakistan's Central Bank Slashes Interest Rates Amid Easing Inflation

Pakistan's central bank cut its benchmark interest rate by 100 basis points to 12% amidst easing inflation and positive growth prospects. This reduction follows a substantial decrease from 22% over six months. The bank forecasts full-year inflation to average 5.5%-7.5% and GDP growth at 2.5%-3.5%.

In a bid to support economic recovery, Pakistan's central bank has slashed its benchmark interest rate by 100 basis points, bringing it down to 12%. This move, expected by analysts, comes as inflation eases and prospects for growth look promising. The rate cut follows a series of aggressive reductions from an all-time high of 22% recorded last June.

The State Bank of Pakistan's governor, Jameel Ahmad, reiterated at a press conference that while inflation is projected to ease further, core inflation remains a concern. He outlined the bank's expectation for full-year inflation to average between 5.5% and 7.5%, necessitating a cautious monetary policy to maintain price stability.

As consumer inflation hits a six-year low, Pakistan's central bank remains optimistic about GDP growth and foreign exchange reserves. The State Bank projects GDP growth at 2.5%-3.5% and asserts that an improved current account and anticipated financial inflows will boost FX reserves beyond $13 billion by June 2025.

(With inputs from agencies.)