Pakistan cuts key rate by 50 bps to 10.5% in surprise move after holding for four meetings
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KARACHI, Dec 15 : Pakistan's central bank cut its key interest rate by 50 basis points to 10.5 per cent on Monday, the bank said on its website, breaking a hold on the rate for four meetings in a move that surprised analysts and came despite IMF warnings to avoid premature easing.
All 12 analysts in a Reuters poll had expected the State Bank of Pakistan (SBP) to hold the policy rate at 11 per cent.
Monday's reduction takes the total easing since rates peaked at 22 per cent to 1,150 basis points, after the SBP delivered 1,100 bps of cuts between June 2024 and May 2025 and then held the rate steady for four meetings before Monday's move.
Inflation edged down to 6.1 per cent in November from 6.2 per cent in October, within the SBP’s 5 per cent–7 per cent target band, with analysts expecting it to rise again later in FY26 as base effects fade and food and transport prices stay volatile.
An IMF staff report last week warned against premature easing, calling for policy to remain data-dependent to anchor expectations and rebuild external buffers, even as Pakistan received a $1.2 billion disbursement under its loan programme.
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