KARACHI: The State Bank of Pakistan (SBP) announced a significant reduction in its policy rate, cutting it by 200 basis points to 13% during its monetary policy meeting on Monday. The new rate will take effect on December 17, 2024.
"At its meeting today, the Monetary Policy Committee (MPC) decided to cut the policy rate by 200 bps to 13 percent, effective from December 17, 2024" the SBP said in a statement.
The SBP highlighted that inflation had declined to 4.9% year-on-year in November 2024, aligning with the expectations of the Monetary Policy Committee (MPC).
"This deceleration was mainly driven by continued decline in food inflation as well as the phasing out of the impact of the hike in gas tariffs in November 2023. However, the committee noted that core inflation, at 9.7 percent, is proving to be sticky, whereas inflation expectations of consumers and businesses remain volatile,"the SBP explained.
Despite this improvement, the MPC noted concerns over core inflation, which remains elevated at 9.7%, and the volatility in inflation expectations among consumers and businesses.
The move aims to provide economic relief while balancing inflationary pressures, ensuring stability in the financial system.
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