SBP Likely to Cut Key Policy Rate 7th Consecutive Time in March 2025

The State Bank of Pakistan (SBP) will cut the key interest rate for the 7th and 8th consecutive times in March and May to bring it down to 10.5 percent this year. The central bank will cut it more quickly with inflation expected to further ease in January, according to Citigroup Global Markets. The bank sees another 100 bps cut in March, and 50 bps in May before pausing, analysts wrote in a note. The base case underpinning the monetary policy committee call is a successful IMF review to eventually pave the way for a $1 billion disbursal in 2Q25F. This comes just a day after SBP’s monetary policy committee (MPC) cut the benchmark interest rate by 100 bps on Monday, bringing it down to 12 percent. In the past 6 sessions alone, MPC has reduced the interest rate by a cumulative 1,000 basis points.