SBP to hold policy meeting on May 5 amid rate cut expectations

ISLAMABAD: The State Bank of Pakistan’s (SBP) Monetary Policy Committee is scheduled to meet on Monday, May 5, to review the country’s key interest rate, the central bank announced in a statement on Wednesday.

The SBP said a monetary policy statement will be released later the same day through a press release.

According to brokerage firm Arif Habib Limited (AHL), the central bank is widely expected to cut the policy rate by 50 basis points, bringing it down from 12 per cent to 11.5 per cent.

At its previous meeting on March 10, the SBP kept the benchmark rate unchanged at 12 per cent, citing a mixed outlook for inflation.

The central bank had noted that inflation in February came in lower than expected, largely due to falling food and energy prices.

However, it also warned that the volatility in these categories could still pose risks to the overall disinflation trend. Core inflation, which excludes food and energy, remained stubbornly high, the MPC had observed.

In its latest report, AHL argued that the continuing decline in inflation, coupled with a significant gap between inflation and interest rates, creates room for a moderate rate cut to support economic activity without compromising financial stability.

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