In a surprising move, the State Bank of Pakistan (SBP) reduced its policy rate by 200 basis points to stimulate economic activity. The decision aligns with efforts to counter slowing growth and ease liquidity constraints for businesses.
Impact on the Economy
The rate cut aims to reduce borrowing costs, encouraging investment and supporting sectors hit by economic uncertainty. However, the move comes with risks, including potential inflationary pressure and its effect on foreign reserves.
Monetary Easing Strategy
The central bank emphasized its focus on maintaining a balance between growth stimulation and macroeconomic stability. Analysts remain divided on the long-term implications of this monetary easing strategy in the current economic environment.
The policy change reflects the SBP’s commitment to supporting economic recovery amidst ongoing challenges
