The Statistic Bureau of Pakistan (SBP) previously announced a fall in general inflation. Furthermore, the inflation fall recorded amounted to the lowest record for the 34 months. Meanwhile, analysts foresee the promise of a fall of 200 basic points in the interest rate by the State Bank of Pakistan (SBP) following the fall in the interest rate.
Meanwhile, the record-breaking low inflation was applauded by the Prime Minister of Pakistan, Shahbaz Sharif. Additionally, he applauded the efforts by the economic team, reassuring the government’s commitment to the well-being of the Pakistani people.
Moreover, experts have cited a fall in the interest rate by the SBP. This is to ensure a balance in the spending and saving of the general public, i.e. Balance of Payment. Experts and economist hope a fall in interest rate by 200 points following a record fall in the inflation in August to 9.6 percent.
Necessary to note, is the previous meeting of the SBP, held on 29 July. The top Bank of Pakistan dropped 100 basic points in the interest rate, pulling it down to 19.5 percent. However, to stimulate the economic growth in the country a maximum of 14 percent inflation is required. Moreover, economist, and stake holder both agree.
Samiullah Tariq, head of research and development of Pakistan Kuwait Investment Company (PVT) limited stated, “I expect a 150 bps reduction in the upcoming monetary policy, as real interest rates currently stand at 9.9pc,”. Furthermore, he explained, “This shows that the market is expecting a minimum rate cut of about 1.5 percentage points,”. Moreover, Mr. Tariq reiterated secondary market yields at 18 percent which is 1.5 percent lower than the current standing. Furthermore, this yield amounts on the three month treasury bill.
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However, Mohammad Sohail of the Topline Research, predicts a cut of 200 basic points in inflation. Mr. Sohail stated, “Based on current inflationary trends, we expect a 100 to 200 bps cut in the policy rate,”
Meanwhile, Sohail noted that further clarity will follow the Treasury Bill (T-Bill) auction at the next SBP meeting, which is set for the 29th of September.
Additionally, Mr. Sohail cited long-term IMF agreement to maintain interest rate at a minimum. Simultaneously, Pakistan hopes for another long-term agreement with the IMF for 37-months.
Additionally, experts also opt for international petroleum prices. Moreover, this also emphasizes the importance of geopolitical scenario. As, inflation is related to household spendings, including petroleum products.
