SBP cuts policy rate by 100 basis points to 12% in 2025’s first monetary policy

The State Bank of Pakistan (SBP) has lowered its policy rate by 100 basis points, bringing it down to 12%. The decision, made in the first meeting of the Monetary Policy Committee (MPC) for 2025, is effective from December 17, 2024.

SBP Governor Jameel Ahmad explained that the cut is due to a drop in inflation, which fell to 4.1% in December 2024. Inflation is expected to stay between 5% and 7% for the fiscal year 2024-25.

The SBP also noted that the economy is showing signs of recovery, with the country’s current account remaining in surplus by over $580 million. The rate cut is seen as a move to support growth by lowering borrowing costs, encouraging investment, and stabilising prices in the country.

The central bank continues to monitor inflation and economic activity to ensure sustainable growth and financial stability in Pakistan.