Pakistan's Central Bank Slashes Policy Rate Amid Eased Inflation

Pakistan's central bank has reduced its key policy rate by 200 basis points to 17.5%, marking the third consecutive cut since June. This move aims to spur economic growth as inflation continues to ease. The rate drops from a peak of 22%, while inflation decreased to 9.6% in August.

Pakistan's central bank cut its key policy rate by 200 basis points to 17.5% on Thursday, making it the third consecutive reduction since June. This move aims to spur economic growth as the nation experiences easing inflation.

The rate cut follows previous reductions of 150 basis points in June and 100 basis points in July. Respondents in a Reuters poll had forecasted a 150 basis point cut after inflation dropped to single digits in August for the first time in nearly three years.

Pakistan's consumer price inflation rate fell to 9.6% in August from a high of nearly 40% in May 2023. Although economic indicators have stabilized since last summer, there are renewed concerns over the IMF's delay in approving a new $7 billion, three-year program, initially expected in August or September.