The State Bank of Pakistan’s Monetary Policy Committee (MPC) is set to meet on Thursday to evaluate the country’s monetary policy, with strong expectations for a significant interest rate cut amidst calls from various sectors.

The current interest rate is at 19.5%, while August’s inflation rate was recorded at 9.6%, resulting in a real interest rate of 10%.

This gap has spurred demands for a substantial reduction, with industry leaders urging a cut of up to 500 basis points to foster economic growth.

Financial analysts predict a more moderate decrease of 150 to 200 basis points. The MPC’s upcoming decision is particularly significant, following previous cuts totaling 2.5 percentage points over the past months.

Read more

SBP expected to cut interest rate by up to 2.5%

Check out who won SBP competition for new currency notes design

SBP working to introduce plastic currency notes, Senate committee told

Although inflation had surged to 38% earlier this year, recent declines have created an opportunity for the government to enhance liquidity in the private sector.

Experts believe that lowering borrowing costs could stimulate investment and economic activity, which is essential for job creation, particularly for the youth. The projected growth rate for the current fiscal year is expected to rise to 3.5% from 2.4% in FY24.