The Monetary Policy Committee (MPC) decided a reduction in the policy rate by 200bps to 17.5% from the existing 19.5%, the State Bank of Pakistan (SBP) announced on Thursday, following the sharp decline in inflation over the past two months.
The new policy rate will be effective from September 13, 2024.
As per a statement released by the central bank, both headline and core inflation fell sharply over the past two months.
“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.
More to follow…
