Karachi, March 6, 2025 – The State Bank of Pakistan (SBP) announced on Thursday that the Monetary Policy Committee (MPC) will convene on Monday, March 10, 2025, to deliberate on the policy interest rate.
The decision of the MPC will be made public through a Monetary Policy Statement, which the SBP will release on the same day via an official press release.
In its previous meeting on January 27, 2025, the MPC opted to reduce the policy rate by 100 basis points, bringing it down to 12 percent, effective January 28, 2025. The Committee observed that inflation had continued to decline as projected, reaching 4.1 percent year-on-year in December. This downward trend has been attributed to subdued domestic demand, favorable supply-side factors, and a supportive base effect. The SBP noted that while inflation was expected to decrease further in January, it could experience a slight uptick in the following months.
Despite the easing of core inflation, the MPC acknowledged that it remained at an elevated level. However, high-frequency economic indicators signaled a gradual improvement in economic activity. The SBP believes that the substantial cumulative reduction of 1,000 basis points in the policy rate since June 2024 will continue to yield positive effects on economic growth in the coming months.
Market participants remain divided over the likely outcome of the upcoming MPC meeting. A poll conducted by Topline Securities Limited suggests that the SBP may lower the benchmark interest rate by 50 basis points. According to the survey, 38% of respondents expect the MPC to maintain the current policy rate, while 62% anticipate a rate cut of at least 50 basis points. Within this group, 37% predict a 100-basis-point cut, 20% expect a 50-basis-point reduction, and 5% foresee a more aggressive 150-basis-point cut.
Analysts at Topline Securities believe that the SBP has room to implement a total rate cut of approximately 100 basis points. They estimate that inflation for FY26 will average between 8-9%, resulting in a real interest rate of 300-400 basis points under the current policy rate of 12%. Historically, Pakistan has maintained a real rate of 200-300 basis points, providing room for further monetary easing by the MPC in the upcoming meeting.