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 Indian minister initiated handshake in Dhaka, first contact since May conflict
- Pakistan’s Ayaz Sadiq and India’s Subrahmanyam Jaishankar met on the sidelines of Khaleda Zia’s funeral
- The National Assembly of Pakistan says Islamabad has consistently emphasized dialogue with New Delhi
ISLAMABAD: Pakistan said on Wednesday Indian External Affairs Minister Subrahmanyam Jaishankar initiated a brief handshake with Speaker of the National Assembly Sardar Ayaz Sadiq in Dhaka, marking the first high-level contact between the two nuclear-armed rivals since their military conflict in May.
The encounter took place on the sidelines of the funeral of former Bangladeshi prime minister Khaleda Zia, attended by senior officials and diplomats from multiple countries.
Ties between India and Pakistan have remained frozen since a four-day military confrontation in May, during which both sides exchanged missile, drone and air strikes before a ceasefire brokered by Washington.
“During Speaker NA Sardar Ayaz Sadiq’s visit to the Parliament of Bangladesh ... the Indian External Minister Dr. S. Jaishankar approached the Speaker National Assembly and [shook] hands,” Pakistan’s National Assembly said in a post on social media platform X.
It added that Jaishankar introduced himself to Sadiq during the brief interaction. India has not commented publicly on the exchange.
“It is noteworthy that Pakistan has consistently emphasized dialogue, restraint, and cooperative measures, including proposals for peace talks,” the post continued.
Tensions between the two neighbors escalated in April after a militant attack in Indian-administered Kashmir killed more than 20 tourists. New Delhi blamed Pakistan for supporting the attack, an allegation Islamabad denied, calling instead for an independent and transparent investigation.
Officials from both countries have largely avoided public interactions since the conflict, with senior figures refraining from handshakes or exchanges at international gatherings.
Sadiq was in Dhaka to attend Zia’s funeral and to convey condolences from Pakistan’s leadership and people. He also met Zia’s son Tarique Rahman, the acting chairman of the Bangladesh Nationalist Party, according to Pakistan’s high commission in Bangladesh.
Speaking to Pakistan’s Geo TV, Sadiq confirmed that Jaishankar approached him in full media glare and exchanged pleasantries.
Responding to a question about being photographed with the Indian minister, he said: “Cameras arrived with them. Our people took the photographs later.”
