RAWALPINDI: Finance Minister Muhammad Aurangzeb expressed confidence on Wednesday that Pakistan could see a policy rate cut later this year. Speaking at the 78th Independence Day and Marka-e-Haque event at the Rawalpindi Chamber of Commerce & Industry (RCCI), he cited easing inflation and improved economic indicators as reasons for cautious optimism. Although the decision rests with the State Bank and the Monetary Policy Committee (MPC), he believes there is “room to do more.”
Aurangzeb’s remarks come a month after the MPC kept the policy rate unchanged at 11%, surprising analysts who expected a cut of 50–100 basis points. However, inflation in June 2025 dropped to 3.2% year-on-year, largely due to falling food prices. Core inflation also showed a mild decline. Aurangzeb said he expects these trends to create space for easing monetary policy in the coming months.
He also highlighted that major credit rating agencies like S&P and Fitch have already upgraded Pakistan, recognising the government’s economic reform agenda. “I am hopeful that Moody’s will follow suit,” he added. These upgrades, he said, reflect international confidence in Pakistan’s macroeconomic direction and reforms.
Turning to trade, the finance minister praised a new deal with the United States that reduces reciprocal tariffs from 29% to 19%. He said this presents a strong opportunity for Pakistani exporters to expand in the US market. According to Aurangzeb, this move gives Pakistan the lowest tariff rate in the region and a key edge in trade competitiveness.
In closing, he stressed the link between national security and economic growth, claiming that the government has reduced the fiscal deficit, increased remittances, and even cut debt servicing costs by Rs1 trillion last year. He also reaffirmed his commitment to tax reform, saying Pakistan cannot afford to overburden its salaried and manufacturing sectors, and that FBR transformation is already underway.