The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index began the week on a bullish note, gaining over 1% during Monday’s trading hours ahead of the Monetary Policy Committee (MPC) meeting. By 12:15pm, the KSE-100 stood at 78,818.54, up by 789.04 points or 1.01%. Key sectors contributing to this positive trend included cement, fertilizer, oil and gas exploration companies, and automobile.
The MPC of the State Bank of Pakistan (SBP) is scheduled to meet today to decide on the key policy rate. Brokerage house Arif Habib Limited (AHL) indicated that the SBP is expected to ease its monetary policy further due to a decline in inflation and improved economic indicators. According to a poll, 55.7% of respondents expect the central bank to reduce the policy rate.
This meeting marks the first policy discussion following the signing of a staff-level agreement with the International Monetary Fund (IMF) and the introduction of a new state budget. Earlier this month, Pakistan and the IMF reached an agreement for a $7 billion, 37-month loan programme. The IMF noted that the new Extended Fund Facility (EFF) is subject to approval by its Executive Board and requires timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners, including Saudi Arabia, the United Arab Emirates, and China.
In June, Pakistan’s central bank reduced its key interest rate by 150 basis points from an all-time high of 22%, a move aimed at boosting growth amid a sharp decline in retail inflation. The country’s headline inflation was recorded at 12.6% year-on-year in June 2024, higher than the 11.8% reported in May, according to the Pakistan Bureau of Statistics (PBS).
On the global front, Asian shares bounced on Monday, starting a week packed with earnings reports and central bank meetings. The United States and the UK may consider easing measures, while Japan might lift borrowing costs in a step towards normality.
