Pakistan's Central Bank Cuts Interest Rate Amid Inflation Easing
Pakistan's inflation rate fell to 5.6% in December 2024, prompting the State Bank of Pakistan to cut its policy rate by 50 basis points to 10.5%. This unexpected move comes despite IMF warnings against premature monetary easing under the country's loan program.
Insights:
In a surprising move, the State Bank of Pakistan has reduced its key policy rate by 50 basis points to 10.5%, following a significant slowdown in the country's consumer price inflation. The inflation rate decelerated to 5.6% year-on-year in December 2024, a marked drop from peaks exceeding 30% in 2023. This decision, breaking a four-meeting hold, defied market expectations, as all analysts polled by Reuters anticipated no change in the rate.
