The State Bank of Pakistan (SBP) raised PKR 384.7 billion in Wednesday’s Pakistan Investment Bonds (fixed) auction, surpassing the target of PKR 350 billion.
The cut-off yields across different tenors decreased by 19-56 basis points, with yields now ranging between 11.90% and 12.80%. cut-off yields across different tenors decreased by 19-56 basis points
Inflation in Pakistan is showing a significant downward trend, with headline inflation projected to ease to 3.06% in January 2025, marking the lowest level in nearly nine years.
This follows a year-on-year inflation rate of 4.1% in December 2024, which was already an 80-month low.
An analyst at Arif Habib Limited noted that the real interest rate is projected to reach 9.98% in January 2025, significantly higher than its historical average of approximately 2.5%.
Additionally, the historical spread between the policy rate and core inflation has averaged around 1.7% over the past nine years. These indicators suggest that the SBP has substantial room for further rate adjustments.
Given the current economic conditions, a 100 basis points rate cut is anticipated in the upcoming monetary policy meeting in January 2025, which would bring the policy rate down to 12%.
