SBP Cuts Interest Rate by 100bps to 11%

The State Bank of Pakistan (SBP) has announced a 100 basis points (bps) reduction in the key interest rate, setting it at 11%, effective from May 6, 2025.

The decision was taken by the central bank’s Monetary Policy Committee, which attributed the rate cut to a notable decrease in inflation over recent months. “Inflation declined sharply during March and April, mainly due to a reduction in administered electricity prices and continued downtrend in food inflation,” the committee stated.

The committee further highlighted a drop in core inflation during April, which supported the decision. “Core inflation also declined in April, primarily reflecting favorable base-effect amidst moderate demand conditions,” the MPC added.

This move comes as a relief for businesses and consumers, potentially paving the way for increased economic activity in the months ahead.