KARACHI: The State Bank of Pakistan (SBP) announced on Monday that it had cut its key interest rate by 100 basis points, lowering it to 11%. This move comes as inflation has shown a significant decline over the last two months, surprising market expectations that the rate would remain unchanged.
The decision was made during the Monetary Policy Committee’s meeting on Monday and will take effect starting May 6, 2025.
The committee explained that the sharp decline in inflation during March and April was primarily due to reduced electricity prices and a continued decrease in food inflation. It also highlighted that core inflation, which excludes food and energy costs, had decreased as well, driven by a favorable base effect amidst moderate demand conditions.
