Pakistan’s central bank cut its key policy rate by a bigger than expected 200 basis points (bps) to 17.5 per cent on Thursday, the third straight reduction since June as the country looks to spur growth as inflation eases.

Most respondents in a Reuters poll had expected a cut of 150 basis points after inflation fell to single digits in August for the first time in nearly three years.

Thursday’s move follows cuts of 150 bps in June and 100 bps in July that have taken the rate down from an all-time high of 22 per cent - set in June 2023 and left unchanged for a year.

Pakistan’s annual consumer price inflation rate slowed to 9.6 per cent in August from a multi-decade high of nearly 40 per cent in May 2023.

“The MPC assessed the real interest rate to still be adequately positive to bring inflation down to the medium-term target of 5-7 per cent and help ensure macroeconomic stability,” the bank’s Monetary Policy Committee said in a statement, announcing the cut.

“This would be essential to achieve sustainable economic growth over the medium term,” it said.

The bank said there was a possibility that average inflation for the fiscal year ending mid-2025 would fall below the previous forecast range of 11.5-13.5 per cent. Economic indicators have stabilised since last summer when the country came close to a default before a last-gasp bailout from the International Monetary Fund.

However, concerns have risen once again with the global lender’s board yet to approve a staff level agreement struck in June for a new, $7 billion, three-year programme that includes the requirement that Pakistan boost its external financing.

The central bank said its forecasts were partially contingent on “timely” foreign inflows.

The government initially said it expected the board approval in August, and later said it was likely in September. The issue is yet to be placed on the IMF board’s agenda.

Meanwhile Pakistan’s annual inflation rate fell to 9.6 per cent in August, the Pakistan Bureau of Statistics said.

The Associated Press of Pakistan (APP) quoted the Bureau as saying that this marks the first single-digit figure in nearly three years.

Meanwhile Pakistan Prime Minister Shehbaz Sharif said on Tuesday his government was working on implementing conditions from the International Monetary Fund (IMF) to complete its loan programme, which he hoped would be the country’s last.

Pakistan in July struck an agreement with the IMF for a $7 billion, 37-month loan programme.

The Roshan Digital Account (RDA) initiative continues to attract significant investment from overseas Pakistanis, with the latest figures showing a total of $357 million invested in Naya Pakistan Certificates (NPCs), Associated Press of Pakistan (APP) reported.

The State Bank of Pakistan’s latest data also reveals that the number of RDA accounts has crossed 723,000, with total remittances exceeding $8.4 billion. These figures demonstrate its success in providing convenient and secure financial access for overseas Pakistanis, fostering financial inclusion and attracting valuable investment to the country. Pakistan’s IT sector kicked off the fiscal year 2024-25 with impressive growth, as IT services exports surged by 32.46 per cent in July, reaching $297 million, the Pakistan Bureau of Statistics (PBS) reported.

According to the Associated Press of Pakistan (APP), this strong performance was fueled mainly by the computer services sector, which grew by 23.09 per cent to hit $230.750 million.

Within this segment, software consultancy stood out with a remarkable 24.53 per cent increase, reaching $77.262 million.

Although information services and certain areas within computer services saw declines, the robust growth in telecommunication services, particularly call centre services (up 49.55 per cent to $25.442 million) and other telecommunication services (up 113.74 per cent to $41.468 million), further bolstered the sector’s overall positive trajectory.

These figures suggest a promising start to the fiscal year for Pakistan’s IT industry, with potential for continued expansion in the global market.

Meanwhile Pakistan’s Federal Minister for Economic Affairs Ahad Khan Cheema has met with a delegation from the European Investment Bank (EIB), highlighting the alignment between EIB’s investment priorities in climate resilience, water, energy, and transport with Pakistan’s developmental needs.

The Associated Press of Pakistan (APP) reported that the EIB delegation expressed particular interest in projects focused on enhancing road infrastructure and water management in Pakistan, particularly in flood-affected regions.

Agencies