Finance Minister Aurangzeb hopes for interest rate cut this year

Finance Minister Muhammad Aurangzeb expressed hope for a key policy rate cut this year by the State Bank of Pakistan (SBP) in “line with inflation” on Wednesday. The comments come as a Reuters poll of market watchers found that the SBP is widely expected to cut its key interest rate next week by 100 basis points (bps) after holding it at a record 22pc for seven straight policy meetings. Speaking at the Pak-China Business Forum in Shenzhen, the finance minister highlighted that the country’s foreign exchange had been stable “both on the back of administrative measures” and structural changes. He also noted that inflationary pressure had slowed to just above 11 per cent, beating the market consensus of 14pc. While admitting that the policy rate was in the domain of the central bank, Aurangzeb said: “We do expect that the policy rate will start moving down in line with inflation because we have now enough cushion in terms of the positive real interest rate that we need to maintain.”