Overview
- The State Bank of Pakistan lowered the policy rate to 10.5%, effective Dec. 16, taking total easing since the 2023 peak to roughly 1,150 basis points.
- The move defied a broad consensus for no change and came despite IMF guidance for a data‑driven, sufficiently tight stance.
- The central bank cited a broadly unchanged inflation outlook and a still‑positive real policy rate, even as headline inflation rose to 6.1% in November from 4.1% in July due largely to flood‑related food shocks.
- Foreign‑exchange buffers improved after a $1.2 billion IMF disbursement, lifting reserves above $15.8 billion, with the SBP projecting about $17.8 billion by June 2026.
- Reactions were mixed as the prime minister welcomed the cut but industry groups called it too small, while the SBP flagged risks from sticky core inflation, food pressures and external vulnerabilities.