There has been a significant decrease in the policy interest rate that Pakistan has implemented. The country’s central bank made the announcement on Monday that it will be lowering interest rates by 250 basis points, bringing them down to 15 percent. This was a record-breaking reduction in Pakistan’s policy rate, which was done with the intention of bolstering the economy, which had been struggling.

Following a significant decrease in Pakistan’s inflation rate, the central bank made this move. It was anticipated in a poll conducted by Reuters that policy rates would be reduced by 200 basis points. There was a forty percent increase in the country’s inflation rate in May 2023, however it has since decreased to seven point two percent in October. The Ministry of Finance anticipates that inflation will continue to decline, reaching a level of between 5.5 and 6.5 percent in the month of November.

Earlier, Pakistan had reduced the policy rate by 700 basis points over the course of four separate measures beginning in June of last year. The economy of Pakistan has been in a precarious situation for a considerable amount of time. The majority of economists are of the opinion that falling interest rates is essential in order to stimulate economic expansion.

By stating that the existing monetary policy will assist stabilize commodity prices and keep inflation between 5 and 7 percent, the State Bank of Pakistan expressed its support for a reduction in interest rates. In addition to contributing to the preservation of macroeconomic stability, it will also contribute to the achievement of economic growth on a sustainable basis.

Jameel Ahmad, the Governor of the Central Bank, informed analysts at a briefing that Pakistan’s bilateral partner countries have promised the International Monetary Fund (IMF) of continuing support for the duration of their current financial recovery program. This announcement was made in conjunction with the announcement of the policy rate decline.