Pakistan’s annual inflation slowed to 4.9% in November largely due to a high base a year earlier.

The State Bank of Pakistan cut its key policy rate by 200 basis points to 13% earlier in December, its fifth straight reduction since June as the country keeps up efforts to revive a sluggish economy as inflation eases.

“The further easing of monetary policy in December is expected to stimulate economic activity. The rising demand for credit, especially from private sector, is a positive signal of growing confidence in the economy,” the report said.

Cumulatively, the central bank has cut rates by 900 basis points during 2024, more than during the pandemic in 2020 when it cut 625 basis points in a year.

The latest cut makes Pakistan amongst the most aggressive of emerging market central banks in the current easing cycle.

The central bank previously targeted 5-7% inflation in the medium term, however, the central bank chief said that the target was now in sight within the next 12 months.