SBP Reduces Policy Rate by 50 Basis Points to Support Economic Growth

The State Bank of Pakistan (SBP) today announced a reduction of its key policy rate by 0.5%, bringing the benchmark interest rate down from 11% to 10.5%. This marks the first rate cut since May 2025 and reflects the central bank’s commitment to balancing inflationary pressures with the need to stimulate economic activity.

The Monetary Policy Committee (MPC) noted that while food‑led inflation remains a challenge, recent indicators suggest easing price pressures in the medium term. The decision aims to provide relief to businesses and households by lowering borrowing costs, encouraging investment, and supporting overall economic growth.

“This measured reduction in the policy rate is intended to strengthen confidence in the economy while maintaining vigilance against inflation risks,” the SBP stated in its announcement.

Key Highlights

• New policy rate: 10.5%
• Cut magnitude: 50 basis points (0.5%)
• Last rate cut: May 2025 (100 basis points)
• Objective: Support growth, improve liquidity, and balance inflationary trends

The SBP reaffirmed its commitment to closely monitor domestic and global developments, ensuring that monetary policy remains aligned with Pakistan’s long‑term economic stability.