Islamabad (TDI): Pakistan’s monetary policy outlook is showing a sharp recovery in real interest rates, with inflation projected below 5% for November and December, a report said Saturday.
According to analysts, real interest rates could reach 10 percent, a dramatic reversal from -14% just 18 months ago.
Despite these high real rates, analysts expect a 200 basis points (bps) policy rate cut on December 16.
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The bond market has also witnessed robust activity as 12-month Treasury bills trade at 11.70%, significantly below the 15% policy rate.
Earlier this week, the Pakistan Stock Exchange (PSX) achieved a new milestone, with the KSE-100 Index surpassing 100,000 points. The stock market has doubled its value in just one year.
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Exports have also surged with forward contracts contributing to the crash. However, this trend is expected to slow down if premiums remain low.
Analysts predict a rebound as the central bank could initiate sell-buy swap operations under IMF guidelines to stabilize premium levels.
