Pakistan’s central bank is expected to cut its key policy rate by 50 basis points, a Reuters poll showed, amid easing inflation and improving conditions.
The State Bank of Pakistan’s Monetary Policy Committee is scheduled to meet on January 26, according to the officially announced timetable for interest rate decisions.
Seven of 10 analysts surveyed expect a 50 basis point cut, while others foresee deeper easing or unchanged rates at the meeting this month ahead soon.
The median forecast points to a 50 basis point move, extending a shift away from aggressive tightening after rates peaked in 2023 cycle nationally earlier.
Analysts supporting a 50 basis point cut cite moderating inflation, stronger foreign exchange reserves and an improving balance of payments outlook for Pakistan amid risks.
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Waqas Ghani of JS Global Capital said easing inflation and firmer buffers allow growth support, though expectations remain anchored despite elevated pressures across markets currently.
Those favouring a larger cut argue macroeconomic conditions support decisive easing, citing improving growth momentum, stable reserves and lower inflation than central bank targets now.
A 50 basis point reduction would lower Pakistan’s policy rate to 10.5 per cent following cumulative cuts totaling 1,150 basis points since mid 2024 period.
Cautious analysts warned risks persist, citing geopolitical uncertainty, fuel price volatility and expectations some believe rates could remain unchanged until July according to survey respondents.
The poll followed data showing December inflation at 5.6 percent, while the IMF cautioned against premature easing under Pakistan’s $7 billion programme currently in place.
