ISLAMABAD: The State Bank of Pakistan (SBP) has said it will hold its Monetary Policy Committee (MPC) meeting on Jan. 27, with discussions to focus on interest rates and inflation amid expectations that the committee will opt for a sixth consecutive policy rate cut.
Pakistan’s central bank reduced its key policy rate by 200 basis points to 13 percent on Dec.16, marking the fifth consecutive cut since June as part of efforts to revive the sluggish economy and ease inflation.
With a cumulative 900 basis points cut in 2024, the move was one of the most aggressive rate reductions among emerging market central banks during the current easing cycle.
“To make the process of monetary policy formulation predictable and transparent, the SBP announces a half-yearly schedule of MPC meetings on a rolling basis,” the central bank said in a statement on its website.
The bank divulged details of the next four MPC meetings to be held on Jan. 27, March 10, May 5 and June 16 respectively. It highlighted that the meeting later in January would be followed by a press conference by SBP Governor Jameel Ahmed.
On Jan. 14, Karachi-based topline securities conducted a poll in which 61 percent of participants expected the SBP to announce a rate cut of 100 basis points.
“Participants are expecting a rate cut due to high real rates of 950bps in January 2025, compared to the historic average of 200-300bps, despite 900bps cut in total interest rates in last five consecutive meetings since Jun 2024,” Topline Securities said.
“We also hold the view that the SBP will announce a rate cut of 100bps, taking the total cut to 1000bps,” it said. “This will be the sixth consecutive cut of this cycle.”
In December last year, the MPC assessed that its approach of gradual policy rate cuts was effectively managing inflationary and external account pressures while supporting sustainable economic growth.
The central bank had also noted that it expected inflation to average “substantially below” its earlier forecast range of 11.5 percent to 13.5 percent in 2025.
Pakistan is navigating a difficult economic recovery, supported by a $7 billion facility from the International Monetary Fund (IMF) secured in September 2024.
The central bank has stated that “considerable efforts and additional measures” will be needed to meet the country’s annual revenue target, which is a key requirement of the IMF agreement.
Finance Minister Muhammad Aurangzeb has, meanwhile, repeatedly called for long-term financial reforms and for the country to enhance exports to ensure sustainable economic growth.
