Karachi: The State Bank of Pakistan (SBP) has announced a significant reduction in the Policy Rate, slashing it by an additional 250 basis points to 15%. This move is part of the central bank’s ongoing monetary easing cycle, driven primarily by declining inflation rates. The latest rate cut marks the fourth consecutive reduction in this cycle, resulting in a cumulative decrease of 700 basis points from its peak rate of 22%.

According to JS Global, the SBP Governor provided insights during the post-monetary policy briefing, emphasizing improvements in major economic indicators and strengthening external sector sustainability. This is reflected in the consistent increase in foreign exchange reserves and a decreased need for external financing. The Governor expressed confidence in the government’s ability to manage its financing from lenders, highlighting a total outstanding amount of US$26.1 billion for the year. Of this, US$16.4 billion is scheduled for rollover or refinance, with US$2.3 billion already rolled over, leaving a balance of US$6.3 billion for the fiscal year 2025.

Additionally, the Governor noted an imminent inflow of US$500 million from the Asian Development Bank, which has already been approved. This inflow is expected to soon bolster the SBP’s reserves to US$11.7 billion. With the anticipated realization of planned official inflows, the SBP’s foreign exchange reserves could potentially increase to approximately US$13 billion by June 2025.