SBP cuts key policy rate by 100bps to 19.5pc

The State Bank of Pakistan (SBP) announced on Monday that it had decided to cut the key interest rate by 100 basis points (bps) to 19.5 per cent from the previous rate of 20.5pc. The Monetary Policy Committee (MPC) statement issued by the central bank said that it had decided to cut the policy rate by 100bps to 19.5pc, effective from July 30, 2024. Addressing a press conference, SBP Governor Jameel Ahmad said the central bank’s MPC had met earlier today and reviewed the current economic developments, highlighting the key role of declining inflationary pressure in the decision. Furthermore, the MPC statement said that the committee had observed that the June 2024 inflation was slightly better than anticipated, adding that it also assessed that the inflationary impact of the fiscal year 2025 budgetary measures was broadly in line with earlier expectations. It also noted that the external account has continued to improve, as reflected in SBP’s foreign exchange reserves “despite substantial repayments of debt and other obligations”.