Pakistan gave good news before India, gave big relief to 25 crore people
Financial experts were expecting a 1.5 percent cut in interest rates. However, some experts had also predicted a two percentage point cut. However, industry leaders had advocated a deeper cut of 500 bps to boost economic growth.
Even though the central bank of India, the Reserve Bank of India, has frozen the interest rates since February 2023, Pakistan has given a big relief to more than 25 crore people of its country.
Yes, the Central Bank of Pakistan has made a big cut in the policy rate. According to media reports, giving relief to the common people from the interest rates, it has been cut by 2 percent. After which it will become very easy for the people of Pakistan to take loans. Let us also tell you how much the interest rates have become in Pakistan.
Pakistan cut rates by 2%
Pakistan's Central Bank on Thursday made a big cut of 2% in the policy interest rate, bringing it down to 17.5%. The State Bank of Pakistan said in a statement that its Monetary Policy Committee (MPC) decided to cut the policy interest rate by 2 percentage points. Thus, the policy rate has come down from 19.5% to 17.5%.
The central bank said that before reaching this decision, the MPC took into consideration several factors affecting the inflation scenario. Retail inflation in Pakistan, which is facing a financial crisis, was 9.6% in the month of August.
5 percent cut was suggested
Financial experts were expecting a 1.5 percent cut in interest rates. However, some experts had also predicted a two percentage point cut. However, industry leaders had advocated a deeper cut of 500 bps to boost economic growth.
The statement said that the Monetary Policy Committee (MPC) has assessed the real interest rate to still be sufficiently positive to help bring inflation to the medium-term target of 5 to 7 percent and ensure macroeconomic stability. The MPC said that global oil prices have fallen sharply and despite weak flows and continued loan payments, the SBP's foreign reserves stood at US$ 9.5 billion on September 6.
What is the growth forecast
Throughout the fiscal year FY24, the SBP maintained the interest rate at a high level of 22 per cent. In recent months, it made two consecutive cuts – initially by 150 bps, followed by another 100 bps – bringing the total reduction to 2.5 percentage points. The government has insisted that it is taking steps to ensure that this will be the last time Pakistan approaches the IMF, provided all the IMF conditions are met on time.
The projected growth rate for the current fiscal year is 3.5 per cent, up from 2.4 per cent in FY24. Experts believe that lowering the cost of borrowing will boost private sector investment, boost economic activity and create much-needed jobs.