The State Bank of Pakistan on Monday announced a reduction in interest rates by 1 per cent, bringing the interest rate down to 11 per cent from previous 12 per cent.
The decision to cut interest rates was taken following the lowest inflation rate in Pakistan in the last 60 years and improving macroeconomic indicators.
The State Bank of Pakistan revealed that the inflation rate of Pakistan has dropped to 0.3 per cent in April, while the average inflation rate in April was 8 per cent.
In March 2025, the inflation rate of Pakistan stood at 0.7 per cent, and it further dropped to 0.3 per cent next month, owing to low inflation rates.
The Monetary Policy Committee (MPC) highlighted the significant of stabilising and maintaining a cautious monetary policy stance.
The central bank has also forecasted positive growth of foreign exchange reserves by next month. Analysts have suggested that a decline in global crude oil prices will also positively impact the inflation rate in Pakistan.
Oil prices fell more than $2 a barrel in Asian trade on Monday as OPEC+ is expected to increase oil production, causing a drop in oil prices globally.
Apart from reduced oil prices, Pakistan also received over $4 billion in remittances in March 2025 alone—the highest monthly inflow ever recorded in the country.
It merits a mention that lowering interest rates in a country reflects a positive outgrowth in the country’s economy.
Read more: New York Times recognises COAS General Asim Munir’s leadership amid India-Pakistan tensions
The New York Times has lauded Pakistan’s Army Chief General Asim Munir for his strong leadership during the recent escalation in tensions between Pakistan and India.
In its latest report, the American newspaper said “he has been shaping Pakistan’s tone in the crisis over Kashmir with his own tough talk.”
The newspaper also noted that General Munir — once known for keeping a low public profile — has taken a prominent role in addressing recent cross-border developments after Pahalgam incident.
The newspaper quoted analysts who describe COAS General Munir as a “hard-liner” on India. His views, the report notes, are rooted in the belief that the long-standing dispute between the two South Asian neighbours is fundamentally religious in nature.
According to security analyst, Pakistan would feel compelled to respond if India launched military strikes.
“The question is whether Modi can choose to stop at this point. Even limited Indian strikes could spiral into a broader conflict”, the analyst said.
