SBP announces new monetary policy today

KARACHI: The State Bank of Pakistan (SBP) will announce the new monetary policy today. A meeting of the Monetary Policy Committee (MPC) is underway, chaired by the SBP Governor Jameel Ahmad. The meeting began at 10 AM on Monday and the new policy will be announced after the meeting.

The next monetary policy will be applicable for the upcoming two months.

From 22 per cent in June 2024, the central bank has brought down interest rates to 12 per cent in January 2025. While there are expectations of a further decline in the policy rate, the economic corners of the country are mulling whether a further decline is even advisable at this point.

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The inflation has certainly plummeted from a whopping 38 per cent last year to a mere 1.5 per cent in February 2025. However, the issue remains that lower inflation is still inflation, and without the corresponding improvement in other macroeconomic indicators, the inflation alone can still heat up the economy at any time.

While the current account is stable for now and the international debt obligations have gotten more time for repayment, these measures are still temporary and basing the policy rate on temporary factors might not end well for Pakistan’s economy.