Pakistan Interest Rate

The Central Bank of Pakistan cut its policy rate by 250 basis points to 15% in its November 4th meeting, surpassing market expectations of a 200 basis point cut, following a previous 200 basis point reduction in September. The decision reflects a sharper than anticipated decline in inflation, which dropped to 6.9% in September and 7.2% in October, from 9.6% in August. The Monetary Policy Committee (MPC) now projects FY25 average inflation to fall below the prior forecast range of 11.5-13.5%. Moreover, positive developments, including IMF Board approval of a new EFF program, and an uptick in foreign investment, bolstered Pakistan’s FX reserves to $11.2 billion. The MPC now anticipates that real GDP growth in FY25 will surpass its previous forecast but remain within the 2.5% to 3.5% range.