Business Desk 
May 05, 2025
As a relief to the trade and industry fraternity in the wake of falling inflation, the State Bank of Pakistan (SBP) has slashed its policy rate by 100 basis points to 11%.
The reduction in the policy rate comes as the sixth consecutive rate cut since June 2024, when the rate stood at 22%.
The inflation in the country dropped to 0.3% in April, which was primarily attributed to lower prices of key food staples such as wheat, potatoes, onions, and pulses. The significant dip in inflation was also supplemented by reduced electricity and fuel charges, Dawn reported.
The revised policy rate for the next two months was brought to light during an MPC meeting on Monday. In March, the SBP kept the rate unchanged, drawing ire from the business leaders seeking relief from high borrowing costs.
In addition to the aforementioned items, substantial weight in the Consumer Price Index (CPI) also significantly affected the overall posture of inflation.
The lower-than-expected inflation in April remained a key reason for a considerable drop in the policy rate, SBP’s Monetary Policy Committee (MPC) explained in a statement.
Although the rate cut was in line with estimations from industry experts, some still suggested that a further escalation in the ongoing geopolitical tensions would trigger inflationary shocks.
