Singapore December 3 2023: Pakistan’s hotter inflation reinforces view that the central bank will likely keep rates on hold at its December meeting, writes bloomberg in its note.
November’s CPI figure is set to push back against a recent build-up in market expectations for a rate cut at the gathering. Despite the acceleration in price gains, the real policy rate (adjusted for estimated average 12-month inflation) remains in positive territory – a restrictive stance.
“We expect the State Bank of Pakistan to start cutting rates from March” states the report.
Consumer price inflation accelerated to 29.2% year on year in November, up from 26.8% in the month prior. We expected a rate of 30.8%, while the consensus forecast was 28.5%. Inflation heated up mainly due to a substantial hike in gas prices. The government raised gas prices in November to meet a condition of the
International Monetary Fund’s bailout program.
Market participants have recently been building expectations for an imminent rate cut. The cut-off yield for the 3-month T-bill in the latest treasury auction held on Nov. 29 was 21.4%. That compares with 22.2% in the auction held prior to the October policy meeting. The SBP kept the rates on hold at 22%, in line with the consensus, at that meeting.
