Pakistan's central bank Saturday slashed the benchmark interest rates to a 42-year low of seven percent, hoping to stimulate growth in the long dormant economy.
"The State Bank (of Pakistan) is cutting the monetary policy rates by 100 basis points, aiming at boosting investment in the country," Ashraf Mahamood Wathra told a press conference in the capital Islamabad.
Pakistan is trying to reboot its economy as key indicators became favourable at home, with the added support from depressed petroleum prices in the global market.
Standard and Poor's early this month revised Pakistan's credit rating outlook from stable to positive and forecast higher GDP growth for 2015 to 2017, amid a stint of economic reforms.
In March, Moody's upgraded Pakistan's dollar bonds rating by one notch from stable to positive.
Net foreign exchange reserves with the central bank reached $12.55 billion dollars this month from just $3.2 billion in January 2014.
The International Monetary Fund (IMF) has voiced satisfaction with Pakistan's progress on reforms, which were required under a $6.6-billion bailout agreed in 2013.
"The low interest and inflation rates would entail robust investment in the country in the next fiscal year," said Mohammad Sohail who heads the Topline Securities, one of the leading brokerage and investment house in Karachi, the country's financial hub.
"The government is likely to set an aggressive target for the GDP growth (in) the next year," he said.
The government of Prime Minister Nawaz Sharif will announce its annual budget for the next fiscal early in June, its second budget since coming into power in 2013.
Pakistan's GDP is estimated to have grown 4.2 percent in the current fiscal year ending June 30, slightly higher than four percent last year.