The State Bank of Pakistan (SBP) announced a significant cut in interest rate, reducing the policy rate by 50 basis points, and fixed the policy rate at 10.5 percent.
The decision lowered the benchmark interest rate by 0.5 percent, fixing the policy rate at 10.5 percent, and marked the first reduction after several consecutive unchanged announcements.
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Economic analysts had largely anticipated a status quo, as the central bank had maintained the same interest rate through its previous four monetary policy statements.
The latest decision followed a meeting of the Monetary Policy Committee, chaired by the SBP Governor, which conducted a detailed assessment of domestic and global economic conditions.
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Officials reviewed inflation trends, growth indicators, and external sector developments to determine whether easing monetary conditions was appropriate amid changing macroeconomic dynamics for the national economy.
According to the SBP, headline inflation showed moderation, with November 2025 inflation recorded at 6.1 percent, providing some space for cautious monetary easing by policymakers.
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The central bank also cited external account pressures, noting that Pakistan’s current account deficit reached 733 million dollars between July and October of the current fiscal year.
In its previous policy announcement, the SBP had kept the interest rate unchanged at 11 percent, citing inflation risks and the economic impact of recent floods.
That earlier decision reflected a cautious stance, as authorities sought to balance price stability with growth concerns during a period of climatic and fiscal challenges.
