The State Bank of Pakistan (SBP) has reduced its key interest rate for the sixth consecutive time in six months. This move is aimed at boosting economic activity and easing financial burdens on businesses and individuals.

Reasons for the Rate Cut

The central bank cited declining inflation rates and the need to stimulate investment as primary reasons for the reduction. Lower interest rates make borrowing more affordable, encouraging businesses to expand and consumers to spend.

Economic Implications

The rate cuts are expected to spur growth in sectors like manufacturing, construction, and real estate. However, some experts warn that excessive rate cuts could strain foreign exchange reserves and weaken the national currency.

Mixed Reactions from Economists

While many praise the SBP’s proactive approach, others question its long-term sustainability. Critics argue that the central bank must strike a balance between growth and financial stability.

Impact on Borrowers

Lower interest rates mean reduced loan repayment costs, which is particularly beneficial for small and medium enterprises (SMEs). It also provides relief to individuals with mortgages and other loans, potentially boosting consumer confidence.

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