State Bank Cuts Interest Rate by 2%, Reduces Policy Rate to 17.5%

The State Bank of Pakistan (SBP) has slashed the interest rate by 2%, bringing the policy rate down from 19.5% to 17.5%, according to a recent statement.

The decision was made during a meeting of the SBP’s Monetary Policy Committee, which also assessed the country’s economic situation. The central bank reported that inflationary pressure has eased in the past two months, aided by declining global oil and food prices, leading to improved business sentiment.

The SBP emphasized that maintaining a tight monetary policy is essential for sustained inflation control, with a target of reducing inflation to 7%.

The statement further noted an increase in cement and petroleum sales in August, along with a narrowing of the current account deficit to $200 million. The SBP expects private sector borrowing to rise and anticipates inflation for the fiscal year to remain below earlier projections.