Exciting News! Monthly inflation in Pakistan has dropped below 12% — the lowest in 30 months, leading to projections of an immediate cut in the State Bank of Pakistan policy rate. S&P Global expects a cumulative 450 basis points reduction by the end of 2024 from the existing peak of 22%.
The recent decline in headline inflation has increased the likelihood of a policy rate cut by the SBP in June 2024. S&P Global Market Intelligence forecasts a total reduction of 450 basis points in the policy rate by the end of the year.
The positive numbers are attributed to a notable deflation in food prices, particularly perishables. The government is optimistic about the declining trend in inflation, expecting an average monthly rate of 13.7% for 2024.
The Ministry of Finance anticipates inflation to remain within the range of 13.5-14.5% in May 2024, surpassing previous estimates. With administrative measures to manage supply and demand, the government aims to stabilize prices and further reduce inflation.
Stay tuned for the SBP monetary policy committee meeting on June 10 for further updates on policy rate cuts and economic outlook.
Published in Dawn, June 4th, 2024
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