SBP cuts policy rate by 1% to 19.5%

The State Bank of Pakistan (SBP) declared on Monday that it had chosen to lower the interest rate from the previous rate of 20.5 percent to 19.5% by 100 basis points (bps).
SBP Governor Jameel Ahmad stated at a news conference that the Monetary Policy Committee (MPC) of the central bank met earlier today and examined recent economic events, emphasising that inflation has decreased from a record-high of 38 percent in May to 12.6 percent last month.
The committee noted that the inflation in June 2024 was marginally better than expected, according to the MPC statement. Additionally, the Committee determined that the budgetary actions for FY [Fiscal year] 2025 had an inflationary impact that was mostly consistent with earlier projections.

SBP’s foreign exchange reserves show that the external account has improved even “despite substantial repayments of debt and other obligations,” the report added.
These factors led the committee to conclude that there was potential to further lower the policy rate in a way that would support economic growth and limit inflationary pressures.
Positive events included the assertion that SBP’s foreign exchange reserves had “improved significantly from $4.4 billion at end-June 2023 to above $9.0 billion” and that the current account deficit had shrunk in the fiscal year 2024.
It also noted that the government and the International Monetary financial (IMF) had reached an agreement at the staff level for a $7 billion, three-year extended financial facility program.