The new monetary policy will be announced by the State Bank of Pakistan today.

The policy rate was set at 19.5 percent in the previous announcement made by the central bank after it had been fixed.

When the Monetary Policy Committee (MPC) of the central bank gets together today, they will determine the policy rate that will be in effect for the next one and a half months.

On the basis of a reduced inflation outlook and a better external account, experts anticipate that the committee will continue to ease monetary policy by about 150–200 basis points.

As the committee having previously dropped the policy rate by 150 basis points on June 26, 2024 and by 100 basis points on July 29, this year, this would be the third straight cut that the MPC would make.

As a result of the single-digit inflation number for August 2024, which was 9.64 percent, economists believe that larger rate cuts are likely to be implemented during the forthcoming sessions of the monetary policy committee.

In the fiscal year 25 (FY25), analysts anticipate that the policy rate would decrease to between 14 and 15 percent.

There have been significant improvements in macroeconomic indices in recent times, which lend credence to the anticipation of a reduction in interest rates.

A large drop in inflation to single digits is the primary element that is supporting the projected reduction in interest rates. Further, the rates of inflation in Pakistan, both headline and core, have been on the decline.

With inflation hovering around the single digits, the business community is calling for a significant reduction in the interest rate, somewhere between 300 and 500 basis points.