The Monetary Policy Committee (MPC) slashed the key policy rate by 200bps to 17.5% from the existing 19.5%, the State Bank of Pakistan (SBP) announced on Thursday, as inflation eased to the first single-digit figure in nearly three years.
The new policy rate will be effective from September 13, 2024.
“The pace of this disinflation has somewhat exceeded the Committee’s earlier expectations, mainly due to the delay in the implementation of planned increases in administered energy prices and favourable movement in global oil and food prices,” it read.
During the meeting, the MPC acknowledged the inherent uncertainty related to these developments, which warranted a cautious monetary policy stance. In this regard, the Committee underscored the importance of the tight monetary policy stance in driving the sustained decline in inflation over the past year.
