Singapore April 26 2024: The consensus view is the State Bank of Pakistan will stand pat on April 29. We expect it to kick off an easing cycle – cutting its key rate 100 basis points to 21%, states Bloomberg.
Bloomberg states “Activity dropped 1% in March from February, when it fell 0.2%, and was down 6% year on year in 1Q24, our tracker shows. Real rates, which turned positive in March, will climb as inflation slows – adding to the drag on growth.”
“The rupee’s rise and the SBP’s stable FX reserves since the last meeting mean there’s room to cut” It further added.
A $1.1-billion IMF loan tranche set to arrive soon will further boost reserves. Bloomberg expected rate cut is unlikely to drive capital outflows as the rate differential with the Fed will still be above the historical average. Bloomberg analyst don’t completely rule out a hold, with the SBP citing oil-driven inflationary risks from the Middle East war.
