KARACHI: The State Bank of Pakistan (SBP) has announced a half-yearly schedule of Monetary Policy Committee (MPC) meetings on a rolling basis. In this regard, the next MPC meeting will be held on Jan 27, 2025 for deliberation on economic indicators to take a decision on key policy rate.
Second MPC meeting of this year will be held on Monday, March 10, third meeting is scheduled on Monday, May 5, and fourth meeting will be convened on Monday June 16. Out of these meetings, January 2025 MPC meeting will be followed by a press conference by SBP Governor Jameel Ahmed.
During the last five meetings the MPC has cut the key policy rate by 9 percent from 22 percent to 13 percent and the market is expecting another cut in policy rate in the January meeting as inflation continues to decline.
Majority expect up to 200bps reduction in key policy rate in upcoming MPC meeting, AHL survey finds
Inflation in Pakistan is showing a significant downward trend, an inflation of 4.1 percent was recorded in Dec’24, which was already an 80-month low.
The SBP is already projected that inflation is expected to remain 5-7 percent by the end of 2025. However, a reversal in this downward trend is likely in February to June this year.
Analysts said that the sharp decline in inflation is attributed to several key factors, including the high base effect, PKR stability against the USD, and subdued prices in food and energy sectors.
According to AHL Research the real interest rate is projected to reach 9.98 percent in Jan’25, significantly higher than its historical average of 2.5 percent. Additionally, the historical spread between policy rate and core inflation has averaged around 1.7 percent over the past nine years. These indicators suggest that the SBP has substantial room for further rate adjustments, it added.
AHL is anticipating a 100bps rate cut in the upcoming monetary policy meeting of Jan’25. This would bring the policy rate down to 12 percent.
Copyright Business Recorder, 2025
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