Karachi January 25 2022: Secondary market yields dropped in a range of 6 basis points to 42 basis points in today’s trading in the fixed income market due to status quo stance of State Bank of Pakistan in yesterday’s Monetary Policy Statement, as per data published by MUFAP.
Biggest drop was recorded for 6-Month paper yield for which dropped by 42 basis points to 10.83 percent from 11.42 percent. While the yield for 3-Month dropped by 10 basis points to 10.1 percent, 1-year by 30 basis points to 11.1 percent, 3-year by 40 basis points to 11.05 percent, 4-year by 41 basis points to 11.1 percent, 5-year by 38 basis points to 11.15 percent, 10-year by 30 basis points to 10.32 percent and 20-year 26 basis points to 12.09 percent.
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Since the last meeting, both short and long-term secondary market yields, benchmark rates and cut-off rates in the government’s auctions declined significantly, as the MPC kept interest rate unchanged at 9.75 percent. The conduct of 2-month open market operations by the SBP has also played its part in cooling the yields of secondary market.
In the yesteday’s meeting, the Monetary Policy Committee (MPC) decided to maintain the policy rate at 9.75 percent, in line with the forward guidance provided in the last monetary policy statement. At that time, the MPC had considered the measures taken to lower inflation and keep the ongoing economic recovery sustainable. These measures include a cumulative 275 basis point increase in the policy rate, higher bank cash reserve requirements, regulatory tightening of consumer finance, and curtailment of non-essential imports.