Pakistan Rate Cut Fails to Boost Private Credit

The State Bank of Pakistan reduced its policy interest rate from 22% to 11% by April 2025, but credit flows to the private sector remain stagnant amid ongoing economic and political uncertainties, suggesting that monetary easing is insufficient without comprehensive reforms. Globally, consumers increasingly use credit cards for large, unplanned expenses, with installment plans helping to manage financial strain but also introducing risks such as high interest rates and potential debt traps. Financial institutions are leveraging advanced data analytics and machine learning to more accurately assess credit risk and predict customer attrition, leading to more targeted retention efforts. These developments highlight the need for both policymakers and financial institutions to adopt holistic, data-driven strategies to restore confidence, manage risk, and foster economic stability.