KARACHI: The government has announced a significant reduction in profit rates for its National Savings schemes, effective January 31, 2025.

The cuts, detailed in a note by Arif Habib Limited, affect a range of instruments, from short-term certificates to long-term savings plans, signalling growing fiscal pressures and a potential shift in monetary policy.

The most striking adjustment is the steep 200 basis point reduction in the rate for Savings Accounts, dropping from 13.5 per cent to 11.5 per cent annualised. Longer-term instruments have also seen notable decreases. The rate for Short Term Savings Certificates has been slashed by 100 basis points, landing at 11.38 per cent. Meanwhile, popular options like the Defence Savings Certificates and Regular Income Certificates have experienced smaller cuts, down 9 and 12 basis points respectively.

The rates for Behbood Savings Certificates, Pensioners Benefit Accounts, and Shuhada Family Welfare Accounts, all designed to support vulnerable segments of society, have been trimmed by 24 basis points. While seemingly modest, these cuts could have a significant impact on fixed-income reliant households.