As disclosed by State Bank governor Jameel Ahmed, this decision was taken at a Monday Monetary Policy Committee (MPC) meeting. Based on the most recent evaluation of the SBP, the reduction is a reaction to the consistently declining inflation rate.
In September, according to Governor Ahmed, there will be another assessment of the interest rates and economic statistics. According to him, despite external payments, the country’s foreign exchange reserves were stable and growing.
By making borrowing more accessible to individuals and businesses, the action seeks to boost economic activity. In order to sustain economic stability and foster growth, the State Bank Governor underlined that the institution is alert and dedicated to implementing the required actions.
Analysts had indicated that there might be a cut in interest rates, with a range of one to 1.5%, which raised huge expectations. With the economy in a difficult place, this proposed cut was intended to boost economic growth and lessen the financial strain on people and businesses.
When making a decision, the MPC meeting evaluates the state of the economy, inflation rates, and other important economic factors. The committee’s recommendations and the ensuing changes to monetary policy were detailed in Governor Jameel Ahmed’s press conference after the meeting.
Effective June 11th, the policy rate was lowered by 150 basis points to 20.5% by the State Bank Monetary Policy Committee (MPC) on June 10. While the notable drop in inflation since February was mostly expected, the MPC pointed out that the May outturn was stronger than projected.
