Ex-SBP governor sees 2.5% cut in interest rate

ISLAMABAD: Former State Bank of Pakistan Governor Tariq Bajwa has said that he estimated that the interest rate in Pakistan is likely to decrease by two and a half percent from 13 to 10.5-11pc.

SBP Governor Jameel Ahmed has convened a meeting of the Monetary Policy Committee on January 27. The rate had reached an all-time high of 22pc on IMF’s recommendations. The State Bank of Pakistan has made significant changes in its monetary policy in 2023 and 2024 in view of inflationary and currency devaluation and economic challenges. In 2023, the policy rate increased by 100 basis points to 17pc on January 23. On March 2 of the same year, there was an increase of 300 basis points and the policy rate in Pakistan reached 20pc. On April 4, 2023, and June 12, 2023, the policy rate was maintained at 20pc. On July 31, 2023, it was increased from 20 to 21pc by adding 100 basis points. On September 14, 2023, the policy rate of the State Bank of Pakistan was maintained at 21 percent, but on October 20, 2023, it increased by 200 basis points and reached the highest level in the country’s history at 22pc.

The interest rate of 22pc was maintained till December 11, 2023. On June 10, 2024, the policy rate was reduced by 150 basis points to 19.5pc. After another 250 basis points reduction, it decreased to 15pc. On December 17, 2024, the policy rate was further reduced by 200 basis points to 13pc due to inflation falling to 4.9pc.