ISLAMABAD, 12th September, 2024 (WAM) — Pakistan’s central bank cut its key policy rate by a bigger-than-expected 200 basis points to 17.5 percent on Thursday, reported. This is the third straight rate reduction since June as the country looks to spur growth as inflation eases.
Most respondents in a poll had expected a cut of 150 basis points after inflation fell to single digits in August for the first time in nearly three years.
Thursday’s move follows cuts of 150 bps in June and 100 bps in July that have taken the rate down from an all-time high of 22 percent – set in June 2023 and left unchanged for a year.
Pakistan’s annual consumer price inflation rate slowed to 9.6 percent in August from a multi-decade high of nearly 40 percent in May 2023.
“The Monet Policy Committee (MPC) assessed the real interest rate to still be adequately positive to bring inflation down to the medium-term target of 5-7 percent and help ensure macroeconomic stability,” the bank’s MPC said in a statement, announcing the cut.
The bank said there was a possibility that average inflation for the fiscal year ending mid-2025 would fall below the previous forecast range of 11.5-13.5 percent.
Economic indicators have stabilised since last summer when the country came close to a default before a last-gasp bailout from the International Monet Fund.
