State Bank Maintains 11% Policy Rate Despite Calls For Further Cuts

The State Bank of Pakistan (SBP) has decided to keep its monetary policy rate unchanged at 11% on Wednesday. This decision follows a series of rate cuts that reduced the policy rate by 1,000 basis points from 22% since June 2024, with the rate last cut to 11% in May. The central bank had also kept the rate steady at 11% during its June 16 meeting.

The Pakistan Business Forum (PBF) has criticized the decision, arguing that both interest and exchange rates are being artificially kept high without economic justification. The PBF has called on Prime Minister Shehbaz Sharif to intervene and ensure necessary adjustments to support economic growth and stability.

In particular, the PBF has taken issue with the current 11% interest rate, deeming it unjustifiable considering the recent drop in Consumer Price Index-based inflation to 4%. The forum has urged SBP to reduce the policy rate to at least 9% in its upcoming monetary policy review scheduled for July 30.