KARACHI: The State Bank of Pakistan is looking to give another rate cut for the sixth consecutive time by decreasing key interest rate by at least 1 percentage point on Monday, reports said.
In sixth straight cut as the SBP attempts to revive economic and business sentiment as inflation slows sharply.
The central bank has slashed rates by 900 bps from an all-time high of 22% in June 2024, in one of the most aggressive moves among emerging markets’ central banks and topping the 625 bps in rate cuts it did in 2020 during the COVID-19 pandemic.
The SBP is expecting to lower rates by 100 basis points (bps), an analyst . Only one analyst expects the bank to hold rates at 13%.
Of the 14 analysts who expect a rate cut, 11 expect a 100 bps reduction, one expects the central bank to lower rates by 150 bps and two expect it to chop rates by 200 bps.
The analyst has said his forecast for a 150 bps cut was “driven by the low December inflation figure and a stable exchange rate supported by a healthier current account.”
Pakistan at present is navigating a challenging economic recovery path and has been buttressed by a $7 billion facility from the International Monetary Fund (IMF) in September.
The country’s current consumer inflation rate slowed to an over 6-1/2-year low of 4.1% in December, largely due to a high year-ago base. That was below the government’s forecast and significantly lower than a multi-decade high of around 40% in May 2023.
The central bank, in its policy statement in December, noted that it expected inflation to average “substantially below” its earlier forecast range of 11.5% to 13.5% this year. However, inflation may pick up in May as the base year effect wears off, some analysts have predicted.
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