Governor State Bank of Pakistan, Jamil Ahmed has said that any further reduction in interest rates will depend on the results of the International Monetary Fund (IMF) review and the current flood economic impact, even with inflation of stability.
Talk to BloombergJamil Ahmed, Governor of the State Bank of Pakistan (SBP), said that the central bank is “very cautious” on the monetary policy despite its ease after the extension of hardship.
Floods and external funding risks can limit the relaxation of the policy, he said.
The government has predicted that inflation can temporarily exceed the upper limit of a 5 % -7 % medium target in the early 2026, but will remain in the ranks in the average and next financial years.
These comments came before the next financial policy committee (MPC) meeting on October 27, while the IMF team is continuing its second review about Pakistan’s $ 7 billion loan program.
Last month, the SBP did not change its benchmark rate for the third straight meeting when more than a thousand people were killed, displaced 4.2 million, and the increase in crop prices caused 8 % crop loss to the country.
Ahmed said that the “inflation of bone bones is under control” in the SBP’s strict monetary policy, adding that the policy rate is quite positive in real terms and is showing “good progress” between monetary and financial policy.
Pakistan’s economy, which easily avoided defaults two years ago, is now gaining stability with the IMF’s financing, which helps to pay debt and build reserves.
The economy is likely to rise 4.2 percent in the financial year 2025, which is more than 2.7 percent last year, while inflation has fallen sharply by 38 percent in 2023, which can prevent SBP’s policy rate by 11 percent.
The governor said that the IMF program “is developing well”, adding that Pakistan has improved its goals on foreign exchange reserves.
The SBP has reinforced the reserves by purchasing about $ 20 billion from the interbank market over the past three years, a move called “Strategic” said it has ensured that the recent MILLION is not under pressure in reserves in payments of 500 million eurobonds.
According to the Bloomberg index or regional colleagues, the SBP reserves have increased the lowest level of $ 3 billion to $ 3 billion, while the Pakistani rupee has been widely stable since 2024.
Ahmed also highlighted the improving trade and investment relations with the United States, noteing that Pakistan’s 19 % tariff rate on exports to the United States is now the lowest in South Asia, which helps to attract international buyers’ interest. Exporters in the textile sector are reporting increasing inquiries, which Ahmad said can translate it soon into strong orders.
He added that the United States has expressed interest in Pakistan’s oil and mining sectors, a Washington investor conference is expected later this month, which is expected to attract new US investment.
Meanwhile, the government is moving towards legalizing cryptocurrency, which Ahmed said will ensure strict rules through proper fat of newcomers and reduce the risks.