SBP cuts policy rate by 50 basis points to 10.5 per cent

KARACHI: The State Bank of Pakistan (SBP) on Monday announced a cut of 50 basis points in the policy rate, bringing it down to 10.5 per cent from 11 per cent.

The decision was taken during a meeting of the SBP’s Monetary Policy Committee (MPC), which reviewed economic indicators and set the policy rate for the next six weeks.

The policy rate had remained unchanged at 11 per cent during the previous four policy reviews.

In May 2025, the central bank had reduced the rate by 100 basis points to 11 per cent, after which no further changes were made until now.

Meanwhile, the International Monetary Fund (IMF) has urged Pakistan to maintain the current monetary policy stance to keep inflation under control and ensure exchange rate stability.

Single-digit interest rate essential for economic activity: LCCI

Lahore Chamber of Commerce and Industry (LCCI) President Faheem-ur-Rehman Sehgal welcomed the rate cut but stressed the need to bring the policy rate into single digits to provide meaningful relief to businesses.

In a statement, he said high interest rates had severely impacted industry and investment, while expensive financing had made business costs unsustainable. He added that further easing of monetary policy was crucial to revive economic activity, generate employment and support industry, trade and small and medium enterprises (SMEs).

Sehgal also warned that a high policy rate was hurting export competitiveness and said the business community expected realistic decisions from policymakers to set the economy in motion.

PM welcomes rate cut

Meanwhile, Prime Minister Shehbaz Sharif expressed satisfaction over the SBP’s decision, calling it a positive step for the business community and the general public.

In a statement, the prime minister said the government’s economic team was working tirelessly to stabilise and strengthen the economy, lauding Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, and the finance ministry officials for their efforts.

He said Pakistan had achieved economic stability due to collective sacrifices by the business community and the public, adding that the government was striving to pass on the benefits of economic improvement to the people.

The prime minister noted that lower interest rates and cheaper credit would particularly benefit small and medium-sized businesses, helping boost economic activity and job creation.