KARACHI: Most analysts predict a seventh consecutive rate cut by Pakistan’s central bank on Monday, amid the country’s first International Monetary Fund (IMF) review for its $7 billion bailout and near-decade low inflation.
Pakistan’s central bank’s current easing cycle, one of the most aggressive among emerging markets, follows a six-month series of rate cuts totalling 1000 basis points (bps), which brought the key rate down from a record high of 22 percent in June to 12 percent, with the latest 100 bps cut in January.
As Pakistan undergoes economic reforms mandated by the IMF program, it stands to secure additional funding from the global lender, pending the ongoing review.
The cash-strapped South Asian nation could unlock a tranche of funding if the ongoing review is approved, ahead of its annual budget presentation looming in June.
Inflation for the month of February clocked in at a near decade low of 1.5 percent, largely due to a high base a year-ago.
A Reuters survey of 14 analysts suggests that the central bank may further reduce rates, with a median forecast of a 50 bps cut.
Of the 10 analysts who expect a rate cut: three anticipate a 100 bps cut, one a 75 bps cut, and six a 50 bps cut. The remaining four analysts predict no change.
Most analysts predicting a rate cut believe the central bank will stop reductions when rates hit 10.5-11 percent, due to a potential inflation rise and anticipate a moderate rise in inflation from March to May.
Ahmad Mobeen, senior economist of S&P Global predicts inflation will “bottom out” in Q1, then gradually rise.
He anticipates a 6.1 percent average inflation for 2025. Despite the “sharp drop” in the Consumer Price Index (CPI), he notes that urban core inflation, indicative of ongoing price pressures, remains high at 7.8 percent.
“The S&P Global HBL Pakistan Manufacturing PMI also indicates rising input costs, pushing manufacturers to hike prices in February 2025 at the fastest pace since October 2024,” he said.
In the last policy meeting, the bank maintained its forecast of full-year GDP growth at 2.5 percent-3.5 percent and predicted faster growth would help boost the country’s previously struggling foreign exchange reserves.
“While GDP posted 0.9 percent growth in 1QFY25, large-scale manufacturing remains in negative territory, and production has yet to gain momentum. The transmission of lower rates to economic activity is yet to be seen,” said Sana Tawfik, head of research at Arif Habib Limited.
She added that the target is only possible if industrial activity picks up and agricultural output improves.
POLL: Pakistan eyes seventh straight rate cut amid decade low inflation, IMF review
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POLL: Pakistan eyes seventh straight rate cut amid decade low inflation, IMF review
- Pakistan follows a six-month series of rate cuts, which brought the key rate down from a record high of 22 percent in June to 12 percent in January
- As Pakistan undergoes economic reforms mandated under the IMF program, it stands to secure additional funding from the global lender
Pakistan says eyeing billions in investments through crypto projects in coming years
- Pakistan Virtual Assets Regulatory Authority Chairman attends Abu Dhabi Bitcoin Conference 2025
- Says Pakistan considers Bitcoin, digital assets “a fundamental pillar of the future financial system“
ISLAMABAD: Pakistan Virtual Assets Regulatory Authority Chairman Bilal bin Saqib said this week that Islamabad is eyeing billions in investment through digital assets initiatives and cryptocurrency projects in the coming years, state media reported.
Analysts have said Pakistan’s attempts to tap into the country’s growing crypto market, crack down on money laundering and terror financing, and promote responsible innovation could bring an estimated $25 billion in virtual assets into the tax net.
Pakistan has attempted to bring virtual asset service providers (VASPs) under a formal licensing regime in recent months. PVARA this month also granted no objection certificates (NOCs) to global crypto exchanges Binance and HTX.
Speaking during an interview at the Abu Dhabi Bitcoin Conference 2025, Saqib said Pakistan is reforming the unregulated crypto market to transform it into a “transparent and investor-friendly system in line with global standards,” state broadcaster Radio Pakistan reported on Saturday.
“He said that interim licenses, mining, tokenization and fintech pilot projects have been launched for major exchanges in Pakistan and billions of dollars are expected to be invested in these projects in the next few years,” Radio Pakistan said in its report.
The PVARA chairman said Pakistan has become the “center of attention” globally due to the significant progress it has achieved in crypto regulation.
Saqib said Islamabad considers Bitcoin and digital assets not only an investment but “a fundamental pillar of the future financial system.”
“He said that Pakistan’s goal is to make youth not consumers but digital creators and architects of the new economy,” Radio Pakistan said.
Pakistan’s move to formalize digital asset regulation comes amid broader economic reforms under an International Monetary Fund program, with authorities under pressure to strengthen financial controls, improve transparency and manage risks linked to emerging technologies.
While officials have framed the crypto framework as regulation-first rather than promotion-led, analysts say its implementation, particularly enforcement and coordination with the central bank, will be closely watched by international lenders and investors.
