Finance Minister Muhammad Aurangzeb on Wednesday hinted at the possibility of further reductions in Pakistan’s policy rate this year, citing a consistent decline in both average and core inflation.
His remarks have fueled market expectations of additional monetary easing by the State Bank of Pakistan (SBP) to support economic growth.
Speaking at an event, Aurangzeb emphasized the independence of the central bank and the Monetary Policy Committee (MPC) in determining the policy rate and managing the market-based exchange rate. “At present, the policy rate is at 11%. I am always very careful to respect the autonomy of the State Bank of Pakistan and the MPC,” he said.
However, the finance minister shared his perspective on the matter, expressing optimism about the potential for further rate cuts. “Given the current inflation trends, whether it’s average inflation or core inflation, I believe there is room for more action on the policy rate. I am hopeful that, during this calendar year, we will see the policy rate moving south,” he added.
The minister’s comments come as Pakistan’s economy shows signs of stabilization following a period of tight monetary policy aimed at curbing inflation. Earlier this year, the SBP reduced its benchmark interest rate to 11% after observing sustained disinflationary trends.
Market analysts have been anticipating further monetary easing as the government seeks to balance inflation control with the need to stimulate economic growth.
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