Pakistan Interest Rate

The State Bank of Pakistan reduced its key policy rate by 200bps to 13% during its December 2024 meeting, in line with market expectations. This marks the fifth consecutive rate cut this year, bringing borrowing costs to their lowest level since April 2022. The move is aimed at balancing inflationary and external account pressures while fostering sustainable economic growth. Pakistan's inflation rate fell to 4.9% in November, the lowest since April 2018, driven by a continued decline in food prices and the waning impact of gas tariff hikes from November 2023. However, core inflation remained elevated at 9.7%. Policymakers also noted a modest improvement in the country’s growth outlook.