KARACHI – The State Bank’s Monetary Policy Committee has announced the new monetary policy.
According to the announcement by the central bank, the State Bank of Pakistan’s Monetary Policy Committee (MPC) has reduced the interest rate by 1%.
Following the cut, the policy rate has been brought down from 12% to 11%.
The statement mentioned that in today’s meeting, the MPC decided to reduce the policy rate by 100 basis points to 11%, effective from May 6, 2025.
The committee observed that due to a reduction in official electricity tariffs and a consistent decline in food inflation during March and April, overall inflation dropped significantly. Core inflation also decreased in April, mainly reflecting the favorable base effect and moderate demand conditions.
Overall, the MPC assessed that the inflation outlook has improved further compared to previous estimates.
However, the committee also noted that rising global trade tariffs and ongoing international political uncertainties could pose challenges to the economy.
The MPC, in its previous meeting on March 10, 2025, adopted a cautious approach and kept the policy rate unchanged at 12 percent, taking inflation expectations and the position of the external account into consideration.
The committee had noted the improvement in economic indicators, including current account balance, inflation, external inflows, monetary management, and foreign reserves, but it was cautious about inching up of inflation in subsequent months as well as uncertainties in the global economic policy environment.
Considering the developments and evolving risks, the MPC had also stressed the need for continuing fiscal consolidation to ensure price stability, which is essential for sustainable economic growth.
