SBP announces reduction in interest rate

The State Bank of Pakistan has announced a reduction in interest rates.

The central bank has reduced the interest rate by 150 basis points.

The bank has cut the interest rate from 22 per cent to 20.5 per cent after a 1.5 per cent reduction.

However, after the significant decline in inflation rate and the initiation of policy rate cuts by central banks around the world, the majority of the market expected the State Bank Central Pakistan to ease its monetary stance.

It should be noted that the State Bank last raised the policy rate by 100 bps by calling an emergency meeting in June 2023 and maintained the record interest rate at 22 per cent for seven consecutive months.

During this period, the decline in inflation led many to believe that a period of monetary easing was likely to begin.