ISLAMABAD: Pakistan’s central bank has cut its key interest rate by 100 basis points to 12 percent, the bank’s governor announced on Monday, amid easing inflation and expectations for growth to pick up after consecutive rate cuts in the last six months.
The State Bank of Pakistan (SBP) has slashed rates from an all-time high of 22 percent in June last year in one of the most aggressive moves among central banks of emerging markets.
Speaking at a press conference, SBP Governor Jameel Ahmed said inflation would ease further in January, but core inflation remained elevated, forecasting that full-year inflation would remain between 5.5-7.5 percent in the fiscal year ending in June.
“The Monetary Policy Committee, after a lot of discussions, decided to reduce our policy rate from 13 percent to 12 percent. In other words, a reduction of 100 basis points was decided in today’s meeting,” he said.
“Our full-year forecast for this year, from July 2024 to June 2025, is that the full-year inflation, in our opinion, will be between 5.5 percent and 7.5 percent.”
Pakistan’s consumer inflation rate fell to 4.1 percent in December, its lowest in more than six years, helped by favorable base effects. It was below the government’s forecast and down from a multi-decade high of around 40 percent in May 2023.
Pakistan posted a current account surplus of $0.6 billion in Dec., bringing the cumulative surplus to $1.2 billion for the first half of the current fiscal year, according to the central bank governor. This was the result of “major positive developments” in the last six months.
“The current account level that we are foreseeing now, which would be the average of this entire year, that is 0.5 percent deficit to 0.5 percent surplus,” Ahmed said.
The central bank maintained its forecast of full-year gross domestic product (GDP) growth at 2.5-3.5 percent. Under a $7 billion bailout from the International Monetary Fund (IMF), Pakistan’s $350 billion economy grew 0.92 percent in the first quarter of fiscal 2024-25, according to data approved by the National Accounts Committee in Dec.
The IMF will conduct a first review of the program in March, according to Ahmed.
“We have taken all actions required by the IMF from the central bank’s side,” he added.
Topline Securities, a Karachi-based brokerage and securities firm, said the latest rate cut would positively impact high leverage, cyclical and consumer discretionary companies.
“The leverage companies will benefit from lower finance cost, cyclicals will benefit from recovery of economy and consumer discretionary companies like autos will benefit from expected rise in consumer financing,” it said.
“Sector-wise, textile sector should stand beneficiary due to high leverage with positive impact of 3-5 percent, Steels 2-4 percent, and cement sector 2-3 percent.”
Pakistan central bank cuts key policy rate to 12 percent amid easing inflation
https://arab.news/b8s82
Pakistan central bank cuts key policy rate to 12 percent amid easing inflation
- The State Bank of Pakistan has slashed rates from an all-time high of 22 percent in June 2024
- Pakistan’s consumer inflation rate fell to 4.1 percent in December, its lowest in over six years
Pakistan says multilateralism in peril, urges global powers to prioritize diplomacy over confrontation
- The country tells the UN international security system is eroding, asks rival blocs to return to dialogue
- It emphasizes lowering of international tensions, rebuilding of channels of communication among states
ISLAMABAD: Pakistan warned the world community on Monday that multilateralism was “in peril” amid rising global tensions, urging major powers to revive diplomacy and dialogue to prevent a further breakdown in international security.
Speaking at a UN Security Council briefing, Pakistan’s ambassador to the UN, Asim Iftikhar Ahmad, said the world was drifting toward confrontation at a time when cooperative mechanisms were weakening.
His comments came during a session addressed by Finland’s foreign minister Elina Valtonen, chairing the Organization for Security and Co-operation in Europe (OSCE), the world’s largest regional security body.
Formed out of the 1975 Helsinki Final Act, the OSCE was designed during the Cold War to reduce tensions, uphold principles of sovereignty and human rights and promote mechanisms for peaceful dispute resolution.
“Today, the foundational ethos of international relations, multilateralism, cooperation and indivisible security, as envisaged in the preamble of Helsinki Final Act, is perhaps facing its biggest challenge in decades,” Ahmed said. “The OSCE, too, is navigating a difficult geopolitical landscape, with conflict raging in the heart of Europe for nearly four years, depletion of trust and unprecedented strains on peaceful co-existence.”
He said a return to the “Helsinki spirit” of dialogue, confidence-building and cooperative security was urgently needed, not only in Europe but globally.
“This is not a matter of choice but a strategic imperative to lower tensions, rebuild essential channels of communication, and demonstrate that comprehensive security is best preserved through cooperative instruments, and not by the pursuit of hegemony and domination through military means,” he said. “Objective, inclusive, impartial, and principle-based approaches are indispensable for success.”
Ahmed’s statement came in a year when Pakistan itself fought a brief but intense war after India launched missile strikes at its city in May following a militant attack in Indian-administered Kashmir. New Delhi blamed Pakistan for the assault, an allegation Islamabad denied while calling for a transparent international investigation.
The Pakistani diplomat said the international system was increasingly defined by bloc politics, mistrust and militarization, warning that such trends undermine both regional stability and the authority of multilateral institutions, including the UN itself.
He urged member states to invest more in preventive diplomacy and the peaceful settlement of disputes as reaffirmed by the Council in Resolution 2788.
Ahmad said Pakistan hoped the OSCE would continue reinforcing models of cooperative security and that the Security Council would back partnerships that strengthen international law and the credibility of multilateral frameworks.
The path forward, he added, required “choosing cooperation over confrontation, dialogue over division, and inclusive security over bloc-based divides.”
