Karachi: State Bank of Pakistan’s Monetary Policy Committee (MPC) reduced key policy rate by 150 basis points (bps), taking it to 20.5 percent, effective from June 11, 2024.

In its statement, MPC said that while significant decline in inflation since February was broadly in line with expectations, May outturn was better than anticipated earlier.“Committee assessed that underlying inflationary pressures are also subsiding amidst tight monetary policy stance, supported by fiscal consolidation.“This is reflected by continued moderation in core inflation and ease in inflation expectations of both consumers and businesses in latest surveys.“At same time, MPC viewed some upside risks to near-term inflation outlook associated with upcoming budgetary measures and uncertainty regarding future energy price adjustments. Notwithstanding these risks and today’s decision, Committee noted that cumulative impact of earlier monetary tightening is expected to keep inflationary pressures in check.” This is first cut in key policy rate in four years. Last time central bank reduced rate was in June 2020 during endemic. Since then, it has gradually gone from 7 percent to record high of 22 percent.