KARACHI: The State Bank of Pakistan has reduced the interest rate by 50 basis points while maintaining the monetary policy easing. According to the central bank, the new interest rate is 10.5 percent, up from 11 percent earlier.
This decision was taken in a meeting of the Monetary Policy Committee, where the country’s economic situation, inflationary trends and global financial conditions were reviewed in detail. Earlier, the interest rate has been reduced by one percent in the May session as well.
Economists believe that this move will reduce the cost of borrowing for both the government and the private sector. According to Senior Economic Analyst Sarah Mehmood, “Cutting interest rates will support construction, trade and small businesses, but maintaining fiscal discipline is equally important.”
Banking circles say the decision is expected to improve liquidity in the market and boost business confidence, which bodes well for overall economic activity.