ISLAMABAD, Nov 5 (Bernama-Xinhua) -- The State Bank of Pakistan (SBP) announced Monday a cut in the policy rate by 250 basis points to 15 per cent with effect from Tuesday.
According to the SBP, the Monetary Policy Committee (MPC) decided to lower the policy rate after noting that inflation has declined faster than expected and reached close to its medium-term target range in October.
"The MPC assessed that the tight monetary policy stance continues to play an important role in sustaining the downward trend in inflation," said the SBP, adding that a sharp decline in food inflation, favourable global oil prices, and absence of expected adjustments in gas tariffs have accelerated the pace of disinflation.
The SBP said that the headline inflation (year-over-year) declined from 9.6 per cent in August to 6.9 per cent in September and 7.2 per cent in October with multiple contributing factors.
The central bank expected average inflation for the ongoing fiscal year from July 2024 to June 2025 to be well below its prior forecast of 11.5-13.5 per cent.
The bank added that approval of the Extended Fund Facility programme for Pakistan by the International Monetary Fund reduced uncertainty and improved the prospects for the realisation of planned external inflows.
The SBP also highlighted a gradual pick-up in economic activity supported by higher production of major crops, including rice and sugarcane, and increased pace of industrial activities in the fields of textile, food, automobile and allied industries.
The bank added that the country's current account posted a surplus for the second consecutive month in September 2024, narrowing the cumulative deficit to US$98 million due to robust workers' remittances and higher exports.
During the first quarter of the ongoing fiscal year, Pakistan's fiscal and primary balances recorded surpluses of 1.4 per cent and 2.4 per cent of gross domestic product, respectively, driven by SBP's high profits and non-tax revenues, said the SBP.
-- BERNAMA-XINHUA
