Reduced prices create “plenty of room” for further interest rate cuts, says SBP chief

• Interest rates at lower in three years, more cuts.
• Powerful reserves that provide basis for stabilizing the local currency.
• The SBP commander reports a surplus of current transactions for the flexibility of politics.

Pakistan’s Central Bank Governor Jameel Ahmad said that reduced inflation had created “plenty of room” for further monetary relaxation, just a day after the country’s reference rate decreased to the lowest level in nearly three years, The news reported report Parachute.

Speech Bloomberg tv’s Shery AHN on Tuesday, Ahmad stressed that both the head and the core inflation are on a downward track, saying: “With it, we have plenty of space to reduce rates.”

“Our real interest rates are quite positive and this provides us with flexibility for interest rate cuts,” said the head of the Pakistani State Bank (SBP).

Pakistan’s inflation, which culminated at a high level of 38% in May 2023, has now fallen to a single -digit level in recent months. The central bank aims to maintain inflation within 5% -7%, but has highlighted potential risks to prospects, including fluctuations in basic products and protective policies in large economies.

“We do not face any pressure on the external account at this stage,” Ahmad said when he was asked about the impact of the volatile prices of basic products on future interest rates.

“Taking into account the current level of honor and also the future prospects, I think we have plenty of room,” he said, adding that the current account is in surplus, giving the central bank “confidence that we can review the policy rate and revise it slightly down . “

Ahmad says the central bank can review policy rates further, as it reduces them to the lowest level in almost three years. He spoke exclusively about “insight with Haslinda Amin” about his prospects for the economy, IMF loan and debt upheavals with Saudi Arabia, the UAE and China.

The Central Bank of South Asia has relaxed since last June to boost demand and support economic recovery. Economics of Bloomberg It expects that the central bank will hold the main interest rate by December, as prices may rise again.

Relaxation in recent months is a drastic transition to Ahmad, who had thrown interest rates to a record of 22% in 2023, as the country saw Asia’s fastest inflation due to increasing energy costs.

Ahmad gave a five -year term to run the Pakistani Central Bank in 2022 and faced the challenge of stabilizing an economy destroyed by heaven prices, political volatility and derogatory currency.

Before the ruler became, Ahmad had spent more than three decades in various upper positions in SBP and the Saudi Arabian central bank.

In recent months, Pakistan has overcome the financial crisis after avoiding a default and secured rescue from the International Monetary Fund and loans from friendly nations. Recovery has boosted investors’ feeling and protects the local currency from the strong dollar in the last three months.

The current level of stocks “is the basis for the stability of the coin,” the commander said. Today’s Pakistan’s foreign stocks amounted to $ 11.4 billion last week, a level covering two months of imports.