Citigroup: SBP Likely to reduce interest rates soon

January 28, 2025 (MLN): The State Bank of Pakistan (SBP) will cut interest rates more quickly with inflation expected to further ease in January, according to Citigroup Global Markets.

Citi expects an additional 100 basis points cut in March, followed by a 50-basis points reduction in May, before pausing. 

This would bring the policy rate to 10.5% by June, according to analysts, including Johanna Chua, Head of Emerging Market Economics, in a recent note.

The monetary policy committee's decision is based on the expectation of a successful IMF review, which is anticipated to pave the way for a $1 billion disbursement in 2025, as Bloomberg reported.

To note that SBP reduced the target rate by 100 basis points to 12%, Governor Jameel Ahmad announced in Karachi on Monday.

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