KSE-100 Index drops 1.63pc as rate cut hopes fade
Business
The central is expected to retain the interest rates at 22pc
KARACHI (Web Desk) – The Pakistan Stock Exchange suffered massive losses as the benchmark KSE-100 Index shed 1,039.34 points, or 1.63 per cent, amid the rising temperature as the MQM-P and the PPP are eyeing to secure a decisive mandate in the megacity.
However, the record-high interest rates remain the concern, as the State Bank of Pakistan’s Monetary Policy Committee is set to announce its decision on Monday evening.
But the rising prices means there is very little possibility of any rate cut because the inflation rate is again on the rise after witnessing a drop during the May-October period last year – meaning the business community will have to wait for two more months for any relief.
So despite the businesses eagerly awaiting reduction in borrowing costs, the SBP is widely expected to hold its key rate at 22 per cent for the fifth policy meeting in a row on Monday, though an expected easing of inflation could leave the door open for rate cuts in the future.
The decision is the last under a caretaker government before the country's general election next month. It also comes in the midst of Pakistan's $3 billion Standby Arrangement (SBA) with the International Monetary Fund (IMF).
With record-high inflation and interest rates, Pakistan has seen its economy crippled, further worsening the cost of living crisis being faced by an overwhelming majority.
While the rescue programme has helped avert a sovereign debt default, some of its conditions have complicated efforts to curb inflation.
By the time trading was closed on Monday, the KSE-100 Index was recorded at 62,773.72 against the previous value of 63,813.06.
Meanwhile, the selling pressure saw the trading volume for the bench index reaching over 161 million shares after negative investor sentiments hit all the sectors, including cement, chemical, commercial banks, oil and gas exploration companies, OMCs, power generation and refinery.
