SBP decreases interest rate by 100bps to 19.50pc

KARACHI, July 29 (SABAH): The State Bank of Pakistan (SBP) on Monday announced decreasing its policy (interest) rate by 100 basis points (1pc) to 19.5pc.

SBP Governor Jameel Ahmad announced the decision of the central bank in a press conference in Karachi. In its statement issued separately, the MPC observed that the June 2024 inflation was slightly better than anticipated.

“The Committee also assessed that the inflationary impact of the FY25 budgetary measures was broadly in line with earlier expectations,” the SBP statement added. It said that the external account has continued to improve, as reflected by the build-up in SBP’s FX reserves despite substantial repayments of debt and other obligations.

“Considering these developments – along with significantly positive real interest rate – the Committee viewed that there was room to further reduce the policy rate in a calibrated manner to support economic activity, while keeping inflationary pressures in check,” it said.

During its last meeting on June 10, the SBP decreased the key policy rate by 150 basis points (bps), bringing it down to 20.5 percent. This marked the central bank’s first rate reduction in four years.

Earlier this month, the IMF and Pakistani authorities reached a staff-level agreement (SLA) for a $7 billion, 37-month loan program designed to promote stability and inclusive growth.