Pakistan Interest Rate

The State Bank of Pakistan unexpectedly held its key policy rate at 12% during its March meeting, pausing an easing cycle that had delivered six consecutive rate cuts since June. Policymakers have already slashed interest rates by 1,000 basis points from a record-high 22% in June 2024 to support economic growth, stating that the current stance is sufficient to maintain macroeconomic stability. At its previous policy meeting, the central bank reaffirmed its full-year GDP growth forecast of 2.5%–3.5%. Meanwhile, Pakistan’s leading trade and industry body recently urged a 500-basis-point rate cut, arguing that businesses remain dissatisfied with monetary policy and view interest rates as excessively high, despite inflation reaching a nine-year low. In February, the country's inflation rate fell to 1.5%, well below the government's projections and a sharp decline from the multi-decade high of around 40% recorded in May 2023.