Pakistan reduces policy interest rate by 250 basis points

(MENAFN) On Monday, the State Bank of Pakistan announced a significant reduction in its policy interest rate, cutting it by 250 basis points to 15 percent. This decision reflects the bank's assessment of the current economic environment, particularly noting a faster-than-expected decline in inflation, which has approached its medium-term target range as of October.

The annual inflation rate in Pakistan stood at 7.2 percent in October, a slight increase from 6.9 percent in September but a considerable decrease from 28.3 percent at the beginning of the year. The bank's monetary policy committee emphasized that the ongoing tight monetary policy has been crucial in maintaining the downward trend in inflation, contributing to overall economic stability.

Recent developments have also played a role in the disinflation process. A notable drop in food inflation, along with favorable global oil prices, has helped to ease inflationary pressures. Additionally, the absence of anticipated increases in gas tariffs has further supported the reduction in overall inflation rates in recent months.

Overall, the State Bank's decision to lower the interest rate is aimed at fostering economic growth while continuing to manage inflation effectively. The bank remains vigilant in monitoring economic indicators and is prepared to adjust its policies as necessary to maintain stability in the financial system.

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