In my view, the State Bank of Pakistan's decision to lower the interest rate is a strategic step to address the current economic challenges. It clearly reflects an intention to promote growth and stabilize financial systems.

Type of Monetary Policy:
This action represents an expansionary monetary policy. By lowering the interest rate, the SBP aims to encourage borrowing, increase money flow, and stimulate economic growth.

Characteristics of Expansionary Monetary Policy:

1. Lower Interest Rates: Reducing the cost of borrowing for businesses and consumers.
2. Increased Money Supply: Banks are encouraged to lend more, circulating more money in the economy.
3. Boost to Investments and Spending: Businesses expand operations, and consumers spend more due to cheaper loans.
4. Focus on Growth and Employment: The policy targets creating job opportunities and increasing production.

Impacts on Pakistan’s Economy:

1. Accelerated Economic Growth: Investments and consumption are likely to rise.
2. Potential Inflation: An increased money supply might lead to higher inflation.
3. Weaker Currency: A lower interest rate might reduce foreign investment inflows.
4. Job Creation: With increased economic activities, more employment opportunities will arise.
5. Financial Relief for Borrowers: Individuals and businesses will benefit from reduced loan payments.

I think reducing the interest rate is a necessary move by the State Bank of Pakistan to inject life into the economy. This policy will not only stimulate growth but also provide relief to borrowers in tough times.

Type of Monetary Policy:
This reduction in the policy rate clearly signifies an expansionary monetary policy. The primary goal is to enhance economic activity by encouraging borrowing and spending.

Characteristics of Expansionary Monetary Policy:

1. Lower Borrowing Costs: A direct reduction in the cost of loans for individuals and businesses.
2. Enhanced Liquidity: Encourages banks to lend more, increasing the money flow in the market.
3. Stimulated Consumer Demand: Affordable loans encourage spending and investment.
4. Economic Growth Priority: The policy supports growth over stringent inflation control.

Impacts on Pakistan’s Economy:

1. Boosted Growth: Easier loans will likely spur business investments.
2. Inflation Risks: If unchecked, the increase in money supply could cause inflation.
3. Currency Depreciation: Reduced interest rates may impact foreign investments negatively.
4. Increased Employment: As businesses grow, job creation follows.
5. Borrower Benefits: Reduced interest rates ease financial burdens on borrowers.

In my opinion, the SBP's decision to lower the policy interest rate reflects its commitment to economic recovery. It shows a balanced approach toward managing growth and addressing inflation concerns.

Type of Monetary Policy:
This policy is an example of expansionary monetary policy. By cutting interest rates, the SBP is encouraging borrowing and investment to fuel economic growth.

Characteristics of Expansionary Monetary Policy:

1. Cheaper Loans: Lower interest rates make borrowing affordable.
2. Stimulated Lending: Banks are motivated to offer more loans, increasing market liquidity.
3. Encouraged Investments: Businesses are more likely to expand due to reduced financing costs.
4. Growth-Oriented Approach: The primary aim is to boost economic activity and employment.

Impacts on Pakistan’s Economy:

1. Higher Economic Activity: Business expansions and consumer spending will likely rise.
2. Inflation Concerns: Increased demand might lead to rising prices in the economy.
3. Weaker Rupee: Foreign investment inflows might decrease, affecting the currency value.
4. Job Creation: As businesses grow, more jobs will be created, reducing unemployment.
5. Ease for Borrowers: Individuals with existing loans will benefit from reduced repayment costs.

I believe the reduction in the interest rate is a bold move by the State Bank of Pakistan to combat economic slowdown. It signifies a well-planned effort to revitalize the economy and provide support to struggling sectors.

Type of Monetary Policy:
This step highlights an expansionary monetary policy. By decreasing the interest rate, the central bank aims to inject momentum into the economy through enhanced financial activities.

Characteristics of Expansionary Monetary Policy:

1. Lower Financing Costs: Reduced interest rates encourage borrowing.
2. Increased Credit Availability: More loans are extended, boosting money flow.
3. Investment Growth: Businesses find it easier to finance new ventures.
4. Focus on Recovery: The policy prioritizes growth, even at the risk of moderate inflation.

Impacts on Pakistan’s Economy:

1. Economic Growth: More investments and spending will drive higher GDP growth.
2. Risk of Inflation: If money supply outpaces productivity, inflation could rise.
3. Currency Impact: The rupee might weaken due to a drop in foreign investment.
4. Job Opportunities: New investments will lead to job creation and reduced unemployment.
5. Borrower Relief: Reduced interest rates lighten the financial burdens of loans.