The State Bank of Pakistan (SBP) has reduced its policy rate by 100 basis points, bringing it down to 11%, effective May 6, 2025. This marks the first rate cut since March, following six consecutive reductions before that.

The Monetary Policy Committee (MPC) cited declining inflation, driven by lower electricity prices and food costs, as a key factor in its decision. Core inflation also eased in April, reflecting moderate demand conditions.

Despite global uncertainties, including trade tariffs and geopolitical risks, Pakistan’s economic indicators showed improvement. The current account surplus reached $1.2 billion in March, supported by record-high remittances. However, challenges remain, such as a widening tax collection shortfall and fluctuations in global oil prices.

The MPC reaffirmed its commitment to maintaining a balanced monetary policy, ensuring inflation stays within the target range of 5–7%, while supporting sustainable economic growth.