Finance ministry expects another policy rate cut as inflation comes down

With the CPI reading for November 2024 dropping to 4.9%, newly-appointed Advisor to Finance Minister on Economic and Financial Reforms Khurram Schehzad said the slowing rate “should result in more monetary easing” by the central bank.

Taking to social media platform X on Monday, Schehzad, who last served at JS Group as CCO/EVP, stated that Pakistan’s inflation, as measured by the Consumer Price Index (CPI), “has made another multi-year low”.

“Inflation for November 2024 has clocked in at 4.9%. This is the lowest reading in the last almost 78 months or 6.5 years,” he said.

“Such low pace of inflation should result in more monetary easing, leading to further decline in cost of capital for businesses and industries, and higher savings on debt servicing for the government resulting in an improved fiscal balance in the coming months/quarters,” he stated.

Data released earlier in the day by the Pakistan Bureau of Statistics (PBS) showed that the country’s inflation eased to 4.9% on a year-on-year basis in November 2024, lower than the reading in October 2024 when it stood at 7.2%.

This takes the CPI inflation average during 5MFY25 to 7.88% compared to 28.62% in 5MFY24.

The declining inflation trajectory has strengthened calls for a further cut in the key policy rate.

The Monetary Policy Committee (MPC) meeting of the State Bank of Pakistan (SBP) is scheduled to take place on Monday, December 16.

In its last MPC held in November, the SBP announced a historic policy rate cut of 250 basis points (bps) that took the key rate to 15%.