Pakistan, May 10 -- On May 5, 2025, the State Bank of Pakistan (SBP) announced a highly anticipated move: the reduction of its benchmark interest rate by 100 basis points, bringing it down to 11% from 12%. This marks a significant pivot in Pakistan's monetary policy strategy after nearly two years of aggressive tightening. The central bank's decision, which came amidst easing inflationary pressures, sluggish economic recovery, and an increasingly tense geopolitical environment, is being closely scrutinized by economists, investors, and international partners. While the reduction aims to boost growth, it comes with layered implications, both positive and potentially adverse, for the country's long-term economic stability.

The decision was...