The State Bank of Pakistan (SBP) is set to announce its monetary policy today (Thursday) for the next 90 days, with expectations of a rate cut between 150 and 200 basis points.

In its previous policy, the central bank had fixed the rate at 19.5 percent. The Monetary Policy Committee (MPC) is meeting to decide the new rate, with experts predicting continued monetary easing due to a lower inflation outlook and an improved external account.

If the MPC reduces the rate, it would mark the third consecutive cut, following a 150bps reduction on June 26, 2024, and a 100bps cut on July 29, 2024.

The expectation of a larger rate cut is fueled by August's inflation reading of 9.64 percent. Analysts predict the policy rate could fall to 14-15 percent in FY25, driven by improving macroeconomic indicators, including the significant drop in inflation. The business community is calling for a deeper rate cut between 300 and 500 basis points in response to the single-digit inflation rate.