Finance Minister Muhammad Aurangzeb on Wednesday expressed optimism that there was scope to reduce the monetary policy rate before the end of this year. Speaking at an event in Islamabad, Aurangzeb acknowledged that decisions on the policy rate and exchange rate rest with the State Bank of Pakistan (SBP) and its Monetary Policy Committee.

However, he said, “In my personal view, there is still room for further cuts, and I am hopeful that before the year concludes, we will see the rate moving downward.”

The SBP has kept the interest rate steady at 11pc since May, following a cumulative cut of 1,000bps from 22pc since June 2024.

The decision has drawn criticism from the business community, which had expected deeper reductions.

Aurangzeb added that both average and core inflation trends suggest space for easing the rate, stressing that “economic stability and national security go hand in hand.”

He hailed the “brave armed forces” for their success during Marka-i-Haq the name given to the period of conflict with India in May, when Pakistan responded to Indian aggression.

“In the past 1.5 years, we have made strong progress on the economic front,” he noted, listing: “Increase in the country’s economy and per capita income, stability in the economic sector, record decrease in financial deficit and inflation, improvement in current account surplus and external account, record increase in foreign exchange reserves and remittances.”

Aurangzeb also highlighted a “double-digit increase” in exports in the textile, IT and pharmaceutical sectors.

Observing an improved “local business environment”, he added: “SME loans have increased by 41pc.

Should it be even higher? The answer is yes. But 41pc is not a small or insignificant number.”

“Loans in the agricultural sector have crossed the Rs2.5 trillion figure. Private sector loans have increased by 38pc,” he added.

The finance czar explained that once fiscal discipline is achieved, the government’s borrowing requirement will decrease, and bank and other economic institutions will reach out to the private sector.

He added that the government had reduced its debt servicing by Rs1tr in the past year. “God-willing, our debt servicing will go down by more than 1tr this year as well.”