Islamabad, June 9, 2025 – The Economic Survey of Pakistan 2024-25 has highlighted that the monetary policy remained adaptive and responsive throughout the fiscal year, maintaining a balance between curbing inflation and fostering economic recovery.
The State Bank of Pakistan (SBP) adopted a flexible, data-driven approach that evolved with changing macroeconomic indicators.
According to the survey, the SBP maintained the policy rate at 22% for almost a year before initiating a gradual easing cycle in June 2024. This shift came in response to falling inflation, improved external balances, and enhanced economic confidence. By May 2025, the policy rate had been reduced by a cumulative 950 basis points during FY 2025 and 1,100 basis points since the beginning of the easing phase. This easing reflects growing optimism about economic stabilization, supported by a current account surplus, increasing foreign exchange reserves, and a stable exchange rate environment.
Despite this easing, the SBP took a cautious stance. In March 2025, the Monetary Policy Committee (MPC) chose to hold the rate at 12% due to persistent core inflation and signs of rising domestic demand. Concerns surrounding a temporary current account deficit in January also influenced the decision. However, headline inflation dropped sharply to 0.3% in April 2025, attributed to energy tariff adjustments, declining food prices, and a favorable base effect. This prompted the MPC to resume the easing cycle in May, cutting the rate by another 100 basis points.
Core inflation also moderated to 8%, and inflation expectations showed a downward trend. These developments reinforced the central bank’s confidence in continuing an accommodative monetary policy stance within its medium-term inflation target of 5–7%.
The Economic Survey emphasizes that this prudent and adaptive monetary policy has been instrumental in supporting macroeconomic stability and growth. Real GDP growth of 2.68% in FY 2025 underscores the beginning of a sustained economic recovery. Looking ahead, the SBP is expected to maintain a calibrated monetary policy to further support recovery, ensure financial stability, and anchor inflation expectations, as outlined in the survey.