KARACHI: Despite a steep fall in the interest rate, the monetary expansion remained negative during the first seven months of the current fiscal year.

Monetary expansion means an increase in the money supply in an economy to stimulate growth. The State Bank of Pakistan (SBP) is responsible for monetary policy and has slashed the interest rate by 1,000bps since June 2024 in six intervals.

The frequent declines in interest rates resulted in a massive outflow of liquidity from banks to the private sector and non-bank financial institutions (NBFIs). Still, it has failed to stimulate economic growth.

Bank advances to the private sector and NBFIs increased sharply in the second quarter of FY25.

Monetary expansion remains negative in July-January FY25

While financial experts........

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