Pakistan's central bank expected to cut rates
Analysts unanimously predict rate cut
Estimates range from 100 bps to 200 bps
By Ariba Shahid
KARACHI, Sept 10 (Reuters) -Pakistan's central bank is expected to cut its key interest rate further during its policy meeting on Thursday, analysts said, after inflation dropped to single digits in August for the first time in nearly three years.
That would follow two consecutive cuts - of 150 basis points in June and 100 bps in July - that have taken rates from an all-time high of 22% to their current standing of 19.5%.
All 14 analysts polled expected another cut, two of them of 100 bps, 10 of 150 bps, and another two of 200 bps.
July's reduction came after a staff level agreement with the International Monetary Fund (IMF) and the introduction of a new state budget which set ambitiously high tax and revenue-raising targets for the government.
In August, central bank chief Jameel Ahmed told Reuters the recent interest rate cuts had had the "desired effect".
In his first interview since assuming the role in 2022, he said inflation continued to slow and the current account remained under control, despite the cuts.
Pakistan's annual consumer price inflation rate slowed to 9.6% in August, the first single-digit reading in almost three years.
Ahmed said the Monetary Policy Committee will review all these developments and that future rate decisions could not be pre-determined.
Ammar Habib, an economist who predicted a 200 bps cut in the poll, said real interest rates of 10% are at the highest level in the last three decades.
"Risks to inflation are also low given softening commodity prices and a fiscally prudent stance of the government for now. In view of this, it makes sense to do at least a 200-bps cut without hurting FX expectations too much," Habib said.
# | Name/ Organization | Expectation |
1 | AKD Securities | -150 |
2 | Al Habib Capital Markets | -150 |
3 | Ammar Habib | -200 |
4 | AWT Investments | -150 |
5 | Arif Habib Limited | -150 |
6 | EFG Hermes | -150 |
7 | Ismail Iqbal | -100 |
8 | JS Global Capital | -150 |
9 | KTrade | -150 |
10 | Lakson Investment | -150 |
11 | Pak Kuwait Investment Co | -150 |
12 | SCS Trade | -200 |
13 | Topline Security | -150 |
14 | Uzair Younus | -100 |
Median | -150 | |
Reporting by Ariba Shahid in Karachi; Editing by Andrew Heavens
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
