Karachi, January 9, 2025 – The State Bank of Pakistan (SBP) Governor, Jameel Ahmad, expressed optimism about further easing of inflation in January, with expectations of fluctuations in the following months.
Speaking at an event organized by the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), Ahmad emphasized that the country is poised to fully resume robust economic activity.
He highlighted the significant reduction in inflation, which dropped from a staggering 38% earlier in the year to 4.1% in December 2024. According to the SBP’s assessment, inflation is projected to stabilize within the target range of 5-7% by the end of 2025, aligning with the medium-term goals set by both the central bank and the government.
The governor acknowledged that the SBP remains committed to achieving its inflation targets, a move expected to provide long-term economic stability. However, he cautioned that volatility in inflation could pose challenges for businesses and households in the near term.
In response to the decreasing inflation rate, the Monetary Policy Committee (MPC) of the SBP recently reduced the key policy rate by 200 basis points, bringing it down to 13%. This marked the fifth consecutive rate cut since June 2024, when the policy rate stood at a peak of 22%.
On the current account situation, Ahmad noted significant improvements due to rising remittances and exports. While acknowledging the growth in remittances, which are projected to comfortably reach $35 billion by the fiscal year’s end, he stressed the importance of boosting exports to ensure sustainable economic stability. Without a consistent rise in export volumes, the country may continue to face challenges in managing its current account and balance of payments.
Discussing foreign debt, the SBP governor revealed that Pakistan’s external debt remained stable, standing at $100.8 billion as of September 2024, with the marginal increase attributed to revaluation adjustments.
Ahmad also urged commercial banks to expand their support for small and medium-sized enterprises (SMEs). He highlighted the critical role SMEs play in generating employment and contributing to the revival of economic activity. Enhanced support for SMEs, he noted, would drive economic growth and strengthen the nation’s financial stability.