The State Bank of Pakistan (SBP) announced on Monday that it had decided to cut its key policy rate by 250 basis points (bps) to 15 per cent from 17.5pc amid demands for a major rate cut. “At its meeting, the Monetary Policy Committee (MPC) decided to cut the policy rate by 250 basis points to 15 per cent, effective from November 5, 2024,” the SPB said in a statement, adding that the Committee noted that inflation had declined “faster than expected and has reached close to its medium-term target range in October”. It highlighted that a “sharp decline in food inflation, favourable global oil prices and absence of expected adjustments in gas tariffs and PDL rates” accelerated the pace of disinflation recently. In its key developments, the MPC noted on a positive note that the International Monetary Fund (IMF)’s Board had approved Pakistan’s new extended fund facility programme, which reduced uncertainty and improved prospects of external flows. “Second, the surveys conducted in October showed an improvement in confidence and a reduction in inflation expectations of both consumers and businesses,” the statement read. Furthermore, the Committee noted that the secondary market yields on government securities and Karachi Interbank Offered Rate (Kibor) had declined. “Considering the developments, the Committee viewed the current monetary policy stance as appropriate to achieve the objective of price stability on a durable basis by maintaining inflation within the 5 – 7 per cent target range,” it said. Most analysts had believed that the central bank would reduce its policy rate by 200 basis points in its meeting, marking the fourth consecutive cut since June, thanks to a decline in inflation, a low current account deficit and higher remittances. Inflation numbers for October clocked in 7.2pc. The headline inflation, measured by the Consumer Price Index (CPI), had slowed to 9.6pc in August, the first single-digit reading in more than three years. Inflation crossed 10pc in November 2021 and then remained in double digits for 33 consecutive months until July 2024. In between, it peaked at 38pc in May 2023. To counter inflationary pressure, the SBP had gradually raised its policy rate from 7pc in August 2021 to a peak of 22pc by April 2023, in an effort to curb inflation. Since then, the rate has been lowered to 17.5pc as inflation began to ease. In a survey conducted by Topline Securities, the brokerage firm noted that 85 per cent of market participants expected that the central bank would announce a minimum rate cut of 200bps. “We believe that the larger rate cut expectations in the upcoming monetary policy meetings are driven by the single-digit inflation reading of 6.9pc in Sept 2024,” the firm said. Consequently, it believed that SBP will continue to keep a positive real rate in the range of 300 to 400 bps in medium term in order to absorb any external and budgetary shock. Meanwhile, Prime Minister Shehbaz Sharif on Monday expressed his satisfaction over the economic stability in the country and the inflow of foreign investment. He said that the State Bank of Pakistan had reduced the policy rate by 250 basis points and with its reduction, the interest rate had been brought down to 15 percent from 17 percent, adding that it would increase the business activities, boost exports and generate employment opportunities. Addressing a meeting of PML-N parliamentary party at the Parliament House, the prime minister said that due to government’s efforts, the inflation rate was also reduced from 38 percent to 7 percent and observed that all the global and national institutions were projecting economic stability in the country. “The evil machinations of those who were out to create chaos and those who pushed the country to verge of default have been foiled,” PM Office Media Wing, in a press release quoted the prime minister as saying. He further said that the history would always remember those who had staked their politics for the sake of country’s survival, adding the historians would always wrote about those who worked for the sake of the country and those elements who addressed letter to International Monetary Fund (IMF) to halt country’s financial programme. The prime minister also lauded the members of parliament belonging to PML-N for sacrificing their politics for the sake of country and said that they had thought about 240 million people. He said that during his recent visits to the Kingdom of Saudi Arabia, a new chapter of economic partnership between the two countries had been added. During the participation in the Future Investment Initiative, he held detailed meeting with Saudi Crown Prince Mohammed bin Salman, adding Saudi Arabia was a close friend and partner of Pakistan and its leadership had assured all kind of assistance to support economic stability and country’s development. He said that volume of Saudi’s investment would increase from $2.2 billion to $2.8 billion. The prime minister said that during his visit to Qatar, its leadership also assured investment in Pakistan and in the bilateral meeting with its leadership, they discussed shaping worth $3 billion projects in this regard. Qatar would invest in aviation, hoteling, IT, energy and other sectors, he said, adding that the government was taking all steps on priority basis to facilitate and encourage the foreign investment. The prime minister maintained that they had been enforcing reforms agenda in every sector of the country. He said that he had directed FBR to accord respect to those who paid taxes as they were the ambassadors of Pakistan. Those who evaded paying taxes despite eligible to pay such and those officers who facilitated them, should be proceeded against, he stressed. In the meeting, the parliamentary party members were also taken into confidence over the proposed legislation in the parliament.