SBP may cut policy rate by 100 bps on Monday

KARACHI: The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is scheduled to convene on Monday, June 10, to deliberate on potential adjustments to the monetary policy. Following the meeting, the SBP will release a detailed monetary policy statement later that day.

At the previous MPC meeting held on April 29, the committee decided to maintain the interest rate at a record high of 22 per cent, marking the seventh consecutive meeting without change.

Initially, there were expectations of a 200 basis points (bps) reduction in the policy rate, but current market sentiment anticipates a more modest cut of 100 bps.

A reduction in the policy rate, if confirmed, would be the first in nearly four years, signaling a significant shift after an extended period of stringent measures aimed at controlling inflation. The timing of this decision is particularly noteworthy as it comes just before the announcement of the federal budget for 2024-25.

Market analysts and economic stakeholders are keenly watching the upcoming MPC meeting, as any change in the policy rate could have widespread implications for the economy, influencing borrowing costs, investment decisions, and overall economic activity in the country.

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