Anticipated Rate Cut by SBP to Boost Economic Relief Efforts

Karachi, The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is poised to meet on June 10, 2024, amid expectations of initiating monetary easing measures. The anticipated decision involves a potential rate cut of 100 to 150 basis points, aimed at balancing the need for economic stimulation while maintaining stability in the external account and currency values.

According to AKD Securities Limited, this move by the SBP is driven by several factors, including a significant drop in inflation to a 30-month low, with current inflation rates at approximately 9.9% year-over-year, expected over the next six months. The relatively stable currency and commodity prices, compared to previous volatility, have contributed to this decrease in inflation rates. Furthermore, the need to alleviate the economic and debt servicing pressures has necessitated the initiation of easing actions from the central bank. The IMF supports these measures under the conditions that the disinflationary trends continue as observed, with the National Consumer Price Index (NCPI) showing a month-on-month decline and CPI expectations aligning with the central bank’s medium-term forecasts. This scenario sets the stage for the SBP to potentially lower interest rates in the upcoming session.