The State Bank of Pakistan (SBP) has reduced the benchmark interest rate by 1%, bringing it down from 13% to 12%. The decision was announced following a meeting of the Monetary Policy Committee. Governor SBP Jameel Ahmad, addressing the media after the announcement, highlighted that the country’s economic indicators are trending positively, with significant reductions in inflation and the current account deficit.
Governor Ahmad noted that inflation, which stood at 38% in May 2023, has now decreased to 4.1%. He expressed optimism that inflation rates would further decline in January. Additionally, the current account remained in surplus during the first half of the fiscal year, contributing to an increase in foreign exchange reserves. Ahmad projected that inflation would likely remain between 5% and 7% by June.
The governor also pointed to encouraging trends in workers’ remittances and export figures, with the country’s total foreign exchange reserves reaching $16.19 billion. He estimated that inflation would hover around 11.50% in July, while for fiscal year 2025, it is expected to remain between 5.5% and 7.5%.
Regarding the current account balance, Ahmad stated that it is projected to range between a 0.5% deficit and a 0.5% surplus in fiscal year 2025. He emphasized that economic activities are on the rise, and foreign exchange reserves are expected to reach $13 billion by the end of fiscal year 2025. While January saw a slight dip in reserves due to debt repayments and lower inflows, GDP growth for fiscal year 2025 is anticipated to be between 2.5% and 3.5%.
Governor Ahmad underscored the positive impact of recent economic policies, expressing confidence in further improvements in the economic landscape in the coming months. He credited the government and the SBP’s measures for helping stabilize the economy.
In his concluding remarks, Ahmad urged the public to trust government policies and play their part in ensuring economic stability. He stressed that collective efforts from both the public and the government are essential for sustained economic growth.
