KARACHI: State Bank of Pakistan (SBP) decreased its interest rate by 100 basis points (bps) to 19.5% from the previous rate of 20.5%, effective July 30, Governor SBP Jameel Ahmed said.
Addressing the press conference on Monday, he said the decision had been taken amid a decline in the inflation rate on June 2024. “The inflation rate has come down to 12.60% last month from 38% while the external account has continued to improve,” he added.
The MPC statement said that the committee also assessed the inflationary impact of the FY25 budgetary measures was broadly in line with earlier expectations. The external account has continued to improve, as reflected by the build-up in SBP’s FX reserves despite substantial repayments of debt and other obligations, it added.
SBP in a statement said the announcement of monetary easing showed positive indicators for the national economy citing a slight drop in inflation, a build-up in SBP’s foreign exchange (FX) reserves despite repayments of debt, and a staff-level agreement with the International Monetary Fund (IMF) for a 37-month extended fund facility (EFF) program of about $7.0 billion.
Furthermore, it added that the committee assessed that the external account has continued to improve, as reflected by the build-up in the central bank’s FX reserves despite substantial repayments of debt and other obligations.
Moreover, international oil prices have also remained volatile in recent weeks, whereas prices of metals and food items have eased. Lastly, with the ease of inflationary pressures and labor market conditions, central banks in advanced economies have also started to cut their policy rates.
