Pakistan Interest Rate

The Central Bank of Pakistan cut its policy rate by 200 basis points to 17.5% during its September 12th meeting, exceeding market expectations of a 150bps cut, following a 100bps cut in July, as both headline and core inflation dropped sharply in recent months. Inflation eased to 9.6% in August 2024, down from 12.6% in June, driven by delayed application of administered energy price hikes and favorable global oil and food prices. Despite this, inflation risks remain due to volatile global commodity prices, potential energy price adjustments, and tax measures. The central bank expects FY25 inflation to fall below its previous forecast of 11.5–13.5%, contingent on fiscal consolidation and external inflows. Additionally, FX reserves stood at around $9.5 billion in early September, despite weak official FX inflows and ongoing debt repayments. As for economic growth, The GDP growth outlook for FY25 remains at 2.5–3.5%.