According to financial analysts, Pakistan’s central bank has the option to lower the country’s key interest rate by 100 basis points by December 2025. They also noted that this would lower financing costs and increase national productivity. The Monetary Policy Committee (MPC) of the central bank will meet on July 30 to determine the key interest rate.
Topline Securities, a brokerage firm based in Karachi, reported that most financial market participants anticipate the central bank lowering its key interest rate by 50 to 100 basis points. According to the report, 56% of respondents anticipate a rate cut of 50 to 100 basis points next week, while 37% anticipate that the policy rate will stay at 11%.
The results show that market confidence in monetary easing has grown as a result of falling inflation and easing global oil prices.
The State Bank of Pakistan (SBP) also maintained the policy rate at 11% at its most recent meeting, citing regional tensions in the Middle East and uncertainty surrounding the federal budget. There seems to be growing support for a rate cut this time.
“We are expecting inflation to average 5-7% in FY26, leaving room for a total of 100 basis points cut in our view after adjusting it for the real rate of 400 basis points,” Shankar Talreja, Topline Securities’ head of research, told Arab News.
At its meeting next week, Talreja said he anticipated the SBP to announce a 50-basis point policy rate cut.
“We are expecting the policy rate to bottom out at 10% by December 2025,” he said.
Shahid Ali Habib, the chief executive officer at brokerage research firm Arif Habib Ltd stated that he anticipated a 50-basis point drop in interest rates. As inflation in the South Asian nation declines, the SBP has aggressively lowered the key policy rate by 11,000 points from a record 22% over the past year.