KARACHI – All eyes are on State Bank of Pakistan ahead of monetary policy review on September 12, as Pakistanis are expected cut in key interest rate.
Ahead of policy rate review, Capital market company Arif Habib Limited shared prediction of 150 basis points (bps) cut in policy rate.
The expected cut in interest rate will be the third consecutive drop since the interest rate reversal started in June this year. Last month, inflation dropped to 9.6 percent, resulting in real interest rate of 1,000bps, creating room for further rate cuts.
In a similar development, both headline and core inflation rates moved down. For the first two months of FY25, the average inflation rate was 10.4 percent, a significant drop from 27.8 percent in the same period of fiscal year.
The foreign reserves of central bank also improved, moving up from $7.6 billion to $9.4 billion over the past year, allowing SBP to cut rates with less risk of depleting reserves.
Pakistan reached a staff-level agreement with IMF, which was finalized in July, and is expected to receive executive board approval soon. IMF’s focus on promoting disinflation aligns with Arif Habib Limited expectations of continued monetary easing, which would help stabilize the economy and foster growth.
State Bank of Pakistan’s liquid foreign reserves rise by $33 million
