Inflation to lower pace further in January, says SBP governor

State Bank of Pakistan (SBP) Governor Jameel Ahmad said the pace of inflation is expected to lower further in January, followed by fluctuations over the next 4-5 months.

Addressing an event organised by the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) on Thursday, Ahmad said the country is positioned “to fully resume economic activity”.

He noted that the inflation rate decreased significantly from 38% to 4.1% recorded in December 2024.

Ahmad said that as per the SBP assessment, by the end of 2025, inflation is expected to stabilise within the target of 5-7%, which is within the central bank and government’s medium-term target.

“The SBP remains committed to achieving its target, which will provide long-term relief,” he said.

“However, volatility may disrupt businesses and the common man.”

Following the slowing pace of inflation, the Monetary Policy Committee (MPC) of the SBP reduced the key policy rate by 200 basis points to 13%. This was the fifth successive cut since June 2024 when the rate stood at 22%.

On the current account situation, the central bank chief expressed that the country’s current account is “in very good condition”, amid an increase in remittances and exports.

“Our exports have not grown as expected and it needs to be further taken upward. Without an increase in exports, we will continue to face current account and balance of payment issues,” he said.

Highlighting remittances, the SBP chief shared that remittance flows are projected to “comfortably achieve” the $35 billion level in the current fiscal year.

The governor shared that Pakistan’s foreign debt stood at nearly $100 billion in June 2022, which remained stable at $100.8 billion by September end. The marginal increase is majorly due to revaluation adjustments, he said.

Ahmad also urged commercial banks to take further initiatives to facilitate SMEs.

“We need to facilitate SMEs because its expansion helps in employment generation and positively contributes to the revival of economic activity,” he said.