Pakistan lowers key interest rate again: Central bank takes aggressive measure to stimulate the economy
- Pakistan lowers key interest rate by 200 basis points to stimulate the economy.
- Rate cuts since June total 900 basis points.
Eulerpool News·
The Central Bank of Pakistan lowered its key interest rate by 200 basis points to 13 percent on Monday – another bold move to stimulate the sluggish economy amidst declining inflation. With this, Pakistan has executed the most aggressive rate cuts among emerging markets this year, excluding some outliers like Argentina.
The Central Bank's monetary policy committee stated that the moderate rate cuts contribute to curbing inflation and external pressures while promoting economic growth in a sustainable manner. The central bank expects inflation in 2025 to be significantly below the previous forecast range of 11.5% to 13.5%.
However, the bank warned of risks to the inflation outlook, including measures to cover the government's tax shortfalls, as well as food inflation and rising global commodity prices. In the near future, inflation may still fluctuate before stabilizing within the target range.
Pakistan is navigating through a challenging economic recovery process, supported by a $7 billion bailout package from the International Monetary Fund (IMF) agreed upon in September. Significant further efforts and measures are needed to meet the country's annual revenue target – a central point in the IMF agreement.
Monday's move follows interest rate cuts of 150 basis points in June, 100 in July, 200 in September, and a record reduction of 250 basis points in November. Since June, the rate cuts have totaled 900 basis points. ![](https://cdn.eulerpool.com/images/data-analytics/better.jpg)
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