The State Bank of Pakistan (SBP) announced on Monday a significant reduction in the interest rate by 2.5 per cent, bringing it down from 17.5 per cent to 15 per cent.

According to details, this was the fourth consecutive decrease, totalling a seven per cent reduction over this period. The decision was made during a meeting of the Monetary Policy Committee (MPC), chaired by the State Bank of Pakistan (SBP) governor, where the current micro and macroeconomic conditions were thoroughly assessed.

The SBP noted that both local and international economic indicators were reviewed as part of the decision-making process.

According to the central bank, the measures have aimed to stabilise the Pakistani rupee, control inflation, and enhance foreign exchange reserves.

The recent data has shown that the inflation had dropped to its lowest level in four years, standing at 7.2 per cent in October.

This has led economists to suggest that the SBP was well-positioned to implement a significant interest rate cut.

Trade organisations had previously called for a reduction in the interest rate of three per cent to five per cent.

The experts also highlighted that with the rupee stabilising and foreign exchange reserves reaching a 30-month high, the environment was conducive for further easing of monetary policy.

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