SBP to Review Policy Rate as Inflation Declines

The State Bank of Pakistan’s Monetary Policy Committee (MPC) will convene on Monday, January 27, 2025, to deliberate on the country’s monetary policy. The central bank confirmed that SBP Governor Jameel Ahmad will announce the committee’s decision in a press conference following the meeting.

Over the last five sessions, the central bank has reduced the policy rate by a total of 900 basis points (bps) due to a significant decline in inflation. Analysts now anticipate that the SBP may lower the key policy rate by another 100 bps.

Intermarket Securities noted that any upcoming rate cut might be moderate and unlikely to cause a major market reaction. However, a smaller reduction could disappoint investors.

The Pakistan Bureau of Statistics (PBS) reported that headline inflation decreased to 4.1% year-on-year in December 2024, down from 4.9% in November.

In its previous meeting, the MPC slashed the policy rate by 200 bps, bringing it to 13%. The committee stated that the effects of earlier rate cuts, initiated in June 2024, are now becoming evident and are expected to influence the economy further in the coming months.