The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is set to convene on January 27, 2025, to review the country's monetary policy.

Market analysts are anticipating another cut in the policy rate, driven by easing inflationary pressures in Pakistan.

Shahi Ali Habib, CEO of Arif Habib Limited, expressed optimism for a potential 100 basis points rate cut, which would lower the policy rate to 12%.

Analysts predict that the MPC may reduce the key policy rate by an additional 100 basis points in the upcoming meeting.

SBP Governor Jameel Ahmad will announce the policy decision during a press conference following the MPC meeting.

The MPC has noted that the cumulative effects of earlier rate cuts from June 2024 are starting to take effect and are expected to continue influencing the economy.

Intermarket Securities suggests that the anticipated rate cut may be modest, with limited market reaction expected.

A smaller rate reduction could negatively impact investor sentiment, highlighting the importance of the MPC's decision.

Habib indicated that headline inflation is projected to drop to 3.06% in January 2025, marking the lowest level in nine years and suggesting a positive trend in the inflation outlook.

As of December 2024, Pakistan's headline inflation rate fell to 4.1% year-on-year, a significant decrease from 4.9% in November 2024 and notably lower than the 29.7% recorded in December 2023.

Over the last five MPC meetings, the SBP has reduced the policy rate by a cumulative 900 basis points, reflecting the declining inflation rates.

In the previous MPC meeting, the policy rate was decreased by 200 basis points, bringing it down to 13%.