PM foresees reduction in policy rate after inflation drops to lowest in 6.5 years

Lauding a record drop in inflation to 4.9% after almost six-and-a-half years, Prime Minister Shehbaz Sharif was optimistic about further reduction in the country's policy rate.

Beating official forecasts, Pakistan's inflation slowed to 4.9% year-on-year in November 2024, down from 7.2% in October, marking its lowest level in six-and-a-half years, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday.

"It is beyond imagination," said the premier addressing a federal cabinet session in Islamabad on Monday, adding that inflation is a tool that can be used to improve the financial condition of the masses, while at the same the increase in inflation increases the hardship of poor people.

Recalling the previous tenure of the Pakistan Muslim League-Nawaz (PML-N), he said that the inflation stood at 3.5% under the leadership of former prime minister Nawaz Sharif.

He said that the positive development would reduce the financial burden on the common man.

He was optimistic about further relaxation in key policy rate by the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) in its next meeting.

After achieving economic stability, the premier called for moving towards economic growth with a focused approach to improve the country’s GDP, exports, production, industrial development, and employment.

The prime minister said revenue collection also recorded an increase as compared to the previous year as a result of enforcement.

Criticising the protests in Islamabad without naming the Pakistan Tehreek-e-Insaf (PTI), PM Shehbaz said uncertainty and chaos adversely affected the Pakistan Stock Exchange (PSX) with a decline of 3,000 points. He said the stock market bounced back, the next day, after normalcy was restored in the capital.

He further said the government took utmost care while allowing the export of sugar to ensure the stability of prices in the local market. He said the sugar exports may earn foreign exchange worth 500 million dollars.

Shehbaz also commended the role of the Pakistan Army in curbing smuggling across Afghanistan, which also played a pivotal role in stabilising sugar prices in the local market.

He also applauded the efforts of Aviation Minister Khawaja Asif and former Aviation Minister Khawaja Saad Rafique for removal of ban on the Pakistan International Airlines (PIA) flights to Europe.

The premier also criticised “irresponsible statement” of a former aviation minister that he said caused economic loss of billions of dollars to the national carrier.

He admitted that the ban on PIA’s foreign routes was one of the reasons that affected the airline’s bidding process.

Last week, the European Union Aviation Safety Agency (EASA) had lifted ban on the flights of Pakistan International Airlines (PIA) flights to Europe after a gap of nearly four years.