In a move aimed at stimulating economic activity and easing business costs, the State Bank of Pakistan (SBP) has announced a 1% cut in the benchmark interest rate, bringing it down from 12% to 11%.

This marks a significant step by the central bank under its new monetary policy, especially as inflation shows signs of stabilizing. According to the SBP, inflationary trends have improved beyond previous expectations, with April continuing the pattern of decline. The bank is optimistic that overall inflation will soon stabilize within its targeted range of 5% to 7%.

The SBP also shared a positive outlook on the country's foreign exchange reserves, projecting that they could rise to $14 billion by June—offering much-needed support to the economy amid ongoing fiscal challenges.

However, the central bank remains cautious. It warned that uncertainties stemming from power tariffs and shifting global political dynamics could still pose risks to Pakistan’s economic stability.

Despite this latest rate cut, various business groups continue to urge the SBP to bring interest rates down to single digits in order to further support growth and investment.

So far, in the current fiscal year, the SBP has slashed the interest rate by a total of 10%, signaling a strong shift toward a more accommodative monetary policy to revive economic momentum.

With inflation cooling and reserves on the rise, the latest policy update reflects cautious optimism—but the road ahead may still be shaped by both domestic and international pressures.