All eyes on SBP monetary policy committee meeting on 16th'

ISLAMABAD: With a well-thought-out strategy of Prime Minister Shehbaz Sharif, there is a strong possibility that the policy/discount interest rate of the State Bank of Pakistan (SBP), which had reached 22pc, would be reduced to around 13pc in a few months.

SBP Governor Jamil Ahmed has convened a meeting of the bank’s MonetaryPolicy Committee (MPC) next Monday, December 16, to decide on the interest rate cut. The inflation rate in the country is expected to lower be 3.5 per cent last weekend due to the important steps, taken by PM Shehbaz Sharif, which had gone up to 38pc before the PMLN government came to power, and the Pakistan Stock Exchange 100 Index in the country has reached 110,000 for the first time in the country’s history.

The annual increase in domestic exports is expected to be $35 billion. Pakistan’s remittances have reached a record high of $2.9 billion in the month of November 2024, which increased by more than 29pc year-on-year compared to Nov 2023.

Overall, remittances during Nov of the fiscal year 2024-25 have reached $14.8 billion, which was $11.1 billion in November of the fiscal year 2023-24. Thus, the cash flow from July to November 2024-25 increased by 33.6pc compared to November 2023-24.

The SBP’s Monetary Policy Committee will review the continuous improvement in the country’s economic and financial situation and based on all the improving economic indicators, it will reduce the rate by 150 to 200 basis points on Dec 16, 2024. Thus, the interest rate, which had gone to an extremely high of 22pc, was reduced to 15pc in the MPC meeting on November 4, 2024, is now likely to be reduced to 13.5pc in the committee meeting on Dec 16. If further indicators of economic stability are developed in the five days from Dec 10 to 14, it will be possible to consider setting the interest rate below 13pc.