Pakistan CB lowers key policy rate to 11% amid economic crisis
KARACHI: A laborer works at a construction site in Karachi on the eve of International Labor Day on April 30, 2025. — AFP
KARACHI: Pakistan's central bank reduced its key policy rate by 100 basis points to 11 percent on Monday, resuming a series of cuts that brought the rate down from a record high of 22 percent after a brief pause in March. Nine of 14 analysts surveyed by Reuters expected the central bank to cuts its key rate, with three expecting a 50 bps cut and two calling for a 100 bps cut.
The decision came in the backdrop of soaring tensions with neighboring India following a deadly terror attack on tourists in Kashmir. The nuclear-armed neighbors have announced a raft of punitive steps that aim to hurt each other economically. It also comes ahead of an imminent International Monetary Fund (IMF) decision on releasing Islamabad's next tranche of $1 billion from its $7 billion bailout program.
The bank had cut the rate by 1,000 basis points since June from an all-time high of 22 percent before a surprise decision to hold it in March, citing the risk of price rises including from increased US tariffs. The inflation rate fell to 0.3 percent in April, its lowest in roughly a decade and below finance ministry estimates of 1.5 percent to 2 percent. The central bank forecasts average inflation to be in the range of 5.5 percent to 7.5 percent for the fiscal year ending June. Pakistan's manufacturing sector growth slowed to a seven-month low in April, with the HBL Pakistan Manufacturing Purchasing Managers' Index (PMI) easing to 51.9 from 52.7 in March, as concerns over global trade weighed due to the impact of US President Donald Trump's tariff announcements. New orders slumped while export orders in particular plummeted. Employment fell for a second month as firms cut costs. — Reuters
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Kuwait Times
16 hours ago
- Kuwait Times
Modi's soaring Indian aviation ambitions face many headwinds
Challenges include plane shortages, infrastructure, regulation NEW DELHI: Prime Minister Narendra Modi's high-profile attendance at a global airlines conference this week underscores how much India is banking on a boom in aviation to support wider development goals, but headwinds to its ambitions are gathering force. Undeterred by the uncertainty gripping the aviation sector globally due to trade tensions and shaky consumer confidence, India's biggest airlines are ploughing ahead with orders for new planes, following record deals two years ago. However, the rapid pace of growth risks losing steam if plane shortages, infrastructure challenges and taxation issues are not addressed, industry officials warned at the International Air Transport Association's annual meeting. Hostilities with neighbor Pakistan are also causing Indian airlines to take large, expensive detours around Pakistani airspace, requiring more fuel and passenger care. Carriers have asked the Indian government to waive some fees and provide tax exemptions, people familiar with the matter have told Reuters, but it is not clear if it will provide any help, despite its high-flying rhetoric. New Delhi says it wants India to be a job-creating global aviation hub along the lines of Dubai, which currently handles much of India's international traffic. 'In the coming years, the aviation sector is expected to be at the center of massive transformation and innovation, and India is ready to embrace these possibilities,' Modi told global aviation leaders on Monday. But the transformation will require billions of dollars of investment in airports and industry supply chains, and a revamp of regulations, industry officials said. Punching below its weight The numbers look promising. IATA forecasts passenger traffic in India will triple over the next 20 years and the country has set a target of increasing the number of airports to as many as 400 by 2047, up from 157 in 2024. 'We are fast emerging as a strategic connector country ... India is a natural connector of the skies and aviation as well,' India's Civil Aviation minister Ram Mohan Naidu told global airline CEOs in New Delhi. Already the world's third-largest aviation market by seats after the US and China, there is significant potential for India to grow. The world's most populous nation, India accounts for around 17.8 percent of people but only 4.2 percent of global air passengers, according to IATA. A record 174 million Indian domestic and international passengers flew in 2024, compared to 730 million in China, IATA data shows. 'The outlook is potentially a very positive one for both the Indian economy and air transport industry. However, such outcomes are not guaranteed,' IATA said in a report on the Indian market. Industry executives and analysts said more work lies ahead in scaling aviation-related infrastructure, updating rules, lowering taxes and making life easier for airlines. 'Even the regulators will agree that they need to update their regulation, because there is a reason why India is not punching above its weight. In fact, it is punching very much below its weight,' Association of Asia Pacific Airlines Director General Subhas Menon said. Dubai-based Emirates, for example, says capacity restrictions on foreign airlines need to be relaxed for the industry to reach its full growth potential. 'For every seat we offer, particularly in the peaks, we've got three to 10 people trying to get it,' Emirates President Tim Clark told reporters. Among other problems, India lacks enough domestic maintenance, repair and overhaul facilities to care for its fleet, making it overly dependent on foreign shops at a time of stiff competition for repair slots, particularly for engines. Global airlines have aircraft sitting on the ground because there aren't enough facilities available for servicing them, IATA Director General Willie Walsh said. 'I think airframe maintenance is a huge opportunity for India because you require labor and you require skills. And that's something that I know India is investing in,' Walsh said, in response to a Reuters question at a press conference. Airline growth globally is being tempered by extended delays to deliveries of new, more fuel-efficient planes due to supply chain issues. India's largest airline IndiGo has been leasing aircraft to allow it to expand internationally while it waits for new planes. This week it partnered with Air France-KLM, Virgin Atlantic and Delta to extend the reach of IndiGo tickets using those airlines' networks. — Reuters
Arab Times
a day ago
- Arab Times
Asian shares trade mixed after Wall Street's rally stalls on US economic data
TOKYO, June 5, (AP): Asian shares were mixed on Thursday, as Wall Street's big recent rally lost some momentum following a pair of potentially discouraging reports on the American economy. US futures edged lower and oil prices declined. Japan's benchmark Nikkei 225 shed 0.2% to 37,658.46, while Australia's S&P/ASX 200 declined nearly 0.1% to 8,535.10. In South Korea, the Kospi jumped 2.1% to 2,829.48 after the country's new president and leading liberal politician Lee Jae-myung began his term, vowing to restart talks with North Korea and beef up a trilateral partnership with the US and Japan. Hong Kong's Hang Seng gained 0.9% to 23,856.54, while the Shanghai Composite was little changed, inching down less than 0.1% to 3,374.30. On Wednesday, the S&P 500 finished the day virtually unchanged at 5,970.81 and remained 2.8% below its all-time high. The Dow Jones Industrial Average fell 0.2% to 42,427.74, and the Nasdaq composite added 0.3% to 19,460.49. The action was stronger in the bond market, where Treasury yields tumbled following the weaker-than-expected economic updates. One said that activity contracted for US retailers, finance companies and other businesses in the services industries last month, when economists were expecting to see growth. Businesses told the Institute for Supply Management in its survey that all the uncertainty created by tariffs is making it difficult for them to forecast and plan. A second report from ADP suggested US employers outside of the government hired far fewer workers last month than economists expected That could bode ill for Friday's more comprehensive jobs report coming from the US. Labor Department, which is one of Wall Street's most anticipated data releases each month. So far, the US job market has remained remarkably resilient despite years of high inflation and now the threat of President Donald Trump's high tariffs. But weakness there could undermine the rest of the economy
Kuwait Times
a day ago
- Kuwait Times
S Korea's leader vows to ‘heal wounds' with nuke-armed North
SEOUL: South Korea's President Lee Jae-myung vowed to reach out to the nuclear-armed North and 'heal wounds' as he took office Wednesday, after winning a snap election triggered by his predecessor's disastrous martial law declaration. South Korea's new center-left leader also warned that 'rising protectionism and supply chain restructuring' pose an existential threat to Asia's export-dependent fourth-largest economy, which has been buffeted by the global trade chaos sparked by US President Donald Trump. Lee scored a thumping victory over conservative Kim Moon-soo of the disgraced ex-president's former party. His term began immediately after the vote tally was certified Wednesday. Lee secured 49.4 percent of the vote, ahead of the 41.2 percent for Kim - who conceded, having been hampered by party infighting and a third-party candidate splitting the right-wing vote. Lee spoke to South Korea's top military commander and formally assumed operational control of the country's armed forces Wednesday, urging them to maintain 'readiness' in case of Pyongyang's provocations - but said in his first comments that he was ready to talk. 'We will heal the wounds of division and war and establish a future of peace and prosperity,' he said. 'No matter how costly, peace is better than war.' He said Seoul would 'deter North Korean nuclear and military provocations while opening communication channels and pursuing dialogue and cooperation to build peace on the Korean Peninsula'. Lee took office just hours before US tariffs on steel and aluminum were due to take effect, with the 50 percent levy hitting crucial South Korean exports. 'The rapid changes in the global order such as rising protectionism and supply chain restructuring pose a threat to our very survival,' Lee said. Markets reacted favorably to the election, with the benchmark KOSPI and the won rising Wednesday. 'Significant departure' Lee's comments on North Korea are a 'significant departure' from those of his hawkish predecessor as he did not immediately attach preconditions to dialogue, said Hong Min, a senior analyst at the Korea Institute for National Unification. It signals 'his desire to resolve disagreements through talks', Hong told AFP. Lee held a modest inauguration ceremony at the National Assembly - where Yoon deployed armed troops on the night he attempted to suspend civilian rule. Lee also announced a number of top appointments, including long-time adviser Kim Min-seok as prime minister and former unification minister Lee Jong-seok as spy chief. Lee's day is expected to end with a flurry of congratulatory phone calls from world leaders, with Trump likely to be the first on the line. Trump's top diplomat, Marco Rubio, was swift to offer his own congratulations and voice hope for working with Lee, who previously sought greater distance from the United States. Washington's alliance with Seoul was 'ironclad', the US secretary of state said, citing 'shared values and deep economic ties'. In a statement, the White House described the election as 'free and fair'. But it added: 'The United States remains concerned and opposed to Chinese interference and influence in democracies around the world'. Chinese President Xi Jinping congratulated Lee, while emphasizing the 'great importance to the development of China-South Korea relations'. 'The Chinese side is willing to work with the South Korean side to ... firmly maintain the direction of good-neighborly friendship, adhere to the goal of mutual benefit and win-win,' Xi said, according to state media CCTV. Japanese Prime Minister Shigeru Ishiba also said he wanted to 'energize cooperation' between Seoul and Tokyo, South Korea's former colonial ruler. And India's Narendra Modi said on X he wanted to 'strengthen' ties with Seoul as he congratulated Lee. 'Positive direction' Lee comes to power with his party already holding a parliamentary majority - secure for the next three years - meaning he is likely to be able to get his legislative agenda done. On the streets of Seoul, South Koreans said they welcomed Lee's overtures to the North. 'Since our economy and many other aspects of society are closely linked to the state of inter-Korean relations, I hope we can take a long-term perspective and move in a more positive direction,' Choi Ki-ho, 55, told AFP. Lee Ju-yeon, a 42-year-old quasi-public sector employee, said they hoped Lee 'will devote himself to uniting our divided nation'. — AFP
