State Bank of Pakistan plans significant interest rate cut as inflation eases

The Pakistani rupee is expected to remain stable between Rs277-282 per dollar through June 2025, contrary to earlier forecasts of Rs300 or more. The currency has appreciated slightly by 0.3% in the first four months of the fiscal year. The State Bank of Pakistan (SBP) may cut its key policy interest rate by 400-500 basis points, reducing it from 17.5% to between 12.5% and 13.5% by the fiscal year's end. An immediate cut of 200 basis points is anticipated on November 4, following two months of single-digit inflation. Pakistan's foreign exchange reserves are projected to reach $13 billion by June 2025, aided by a new $7 billion IMF program. The current account deficit is expected to remain manageable at $1.3 billion, with GDP growth forecasted at 2.5-3% for FY25.