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Kuwait Times
30-07-2025
- Business
- Kuwait Times
Pakistan holds key rate steady to stabilize inflation
LAHORE: Labourers unload sacks of potatoes from a truck at a local vegetable market in Lahore on July 30, 2025. -- AFP KARACHI: Pakistan's central bank left its key interest rate unchanged at 11 percent on Wednesday, saying the outlook for inflation had deteriorated due to energy prices, surprising analysts who had expected another cut. The Monetary Policy Committee of the State Bank of Pakistan said in a statement that energy prices, particularly for gas, had risen more than expected. The panel also noted that the trade deficit was expected to widen further in the fiscal year ending June 2026, amid a pickup in economic activity and a slowdown in global trade. 'The inflation outlook has somewhat worsened,' it said. 'Given this macroeconomic outlook and the emerging risks, the MPC considered today's decision as necessary to ensure price stability.' In a Reuters poll this week, all 15 analysts said they expected the SBP to ease, with nine forecasting a 50 basis-point cut, four predicting a deeper 100 basis-point reduction and two projecting a smaller 25 basis-point cut. 'You have to be cautious,' State Bank Governor Jameel Ahmad, told a news conference in Karachi, after announcing the policy rate, saying it is better to wait than to take action and then have to reverse it. Pakistan is pushing through a series of economic reforms under a $7 billion International Monetary Fund Program, including a contractionary government budget passed in June that slashes spending to curb its fiscal deficit. In its Economic Outlook Update on Tuesday, the IMF cut its growth forecast for Pakistan for the fiscal year ending June 2026 to 3.6 percent, well below the government's 4.2 percent target. The Committee assessed that the real policy rate should be adequately positive to stabilize inflation in the target range of 5 percent–7 percent, the statement said. Headline inflation slowed to 3.2 percent in June and is projected at 3.5 percent–4.5 percent in July, within the SBP's 5.5 percent–7.5 percent target range for the fiscal year ending June 2026. The State Bank took a cautious stance given the fragile situation of the currency and the balance of payments, said Adnan Sheikh of Pakistan Kuwait Investment Company, a Pakistani development financial institution. 'It opted to wait and see the impact of recent monetary easing, and the crop situation given the flooding,' he said, referring to heavy monsoon rains across the country this month. The SBP held rates in June after a 100 basis-point cut in May. Since June 2024, it has lowered its policy rate by 1,100 basis points from a record 22 percent as price pressures receded. The government says the economy has stabilized, but analysts warn growth remains fragile and global commodity price swings could still add pressure on prices and external balances. GDP is projected to grow between 3.25 percent and 4.25 percent this year, the governor said. — Reuters
Gulf Today
30-07-2025
- Business
- Gulf Today
Pakistan surprises by holding key rate steady to stabilise inflation
KARACHI: Pakistan's central bank left its key interest rate unchanged at 11% on Wednesday, saying the outlook for inflation had deteriorated due to energy prices, surprising analysts who had expected another cut. The Monetary Policy Committee of the State Bank of Pakistan said in a statement that energy prices, particularly for gas, had risen more than expected. The panel also noted that the trade deficit was expected to widen further in the fiscal year ending June 2026, amid a pickup in economic activity and a slowdown in global trade. "The inflation outlook has somewhat worsened," it said. "Given this macroeconomic outlook and the emerging risks, the MPC considered today's decision as necessary to ensure price stability." In a Reuters poll this week, all 15 analysts said they expected the SBP to ease, with nine forecasting a 50 basis-point cut, four predicting a deeper 100 basis-point reduction and two projecting a smaller 25 basis-point cut. "You have to be cautious," State Bank Governor Jameel Ahmad, told a news conference in Karachi, after announcing the policy rate, saying it is better to wait than to take action and then have to reverse it. Pakistan is pushing through a series of economic reforms under a $7 billion International Monetary Fund programme, including a contractionary government budget passed in June that slashes spending to curb its fiscal deficit. In its Economic Outlook Update on Tuesday, the IMF cut its growth forecast for Pakistan for the fiscal year ending June 2026 to 3.6%, well below the government's 4.2% target. The Committee assessed that the real policy rate should be adequately positive to stabilise inflation in the target range of 5%-7%, the statement said. Headline inflation slowed to 3.2% in June and is projected at 3.5%-4.5% in July, within the SBP's 5.5%-7.5% target range for the fiscal year ending June 2026. The State Bank took a cautious stance given the fragile situation of the currency and the balance of payments, said Adnan Sheikh of Pakistan Kuwait Investment Company, a Pakistani development financial institution. "It opted to wait and see the impact of recent monetary easing, and the crop situation given the flooding," he said, referring to heavy monsoon rains across the country this month. The SBP held rates in June after a 100 basis-point cut in May. Since June 2024, it has lowered its policy rate by 1,100 basis points from a record 22% as price pressures receded. The government says the economy has stabilised, but analysts warn growth remains fragile and global commodity price swings could still add pressure on prices and external balances. GDP is projected to grow between 3.25% and 4.25% this year, the governor said. "We have to grow at a pace which we can maintain," he said. Pakistan's finance ministry on Monday projected consumer inflation for July to remain in a 3.5-4.5% range, citing stable prices and improved supply conditions, as price pressures ease further after the previous fiscal year's sharp decline. Inflation stood at 3.2% in June, the ministry said in its monthly economic report, while average inflation for the fiscal year ending June 30 dropped to 4.49%, a nine-year low, from 23.4% the year before. Pakistan's fiscal year begins on July 1. The ministry said the economy is expected to sustain its recovery in the early months of fiscal year 2026, underpinned by an improved macroeconomic backdrop and growing investor confidence. Large-scale manufacturing likely maintained momentum in June, supported by rising private sector credit offtake and expanding production activity, the report said. The rebound is expected to lift imports of raw materials and intermediate goods, while aiding value-added exports, it added. Strengthening domestic demand, a stable exchange rate, and steady global commodity prices were also likely to boost exports, remittances and imports in July, reinforcing external sector stability, the ministry said. However, it warned that recent heavy rains could pose risks to agricultural output and supply chains, potentially impacting the inflation outlook in the coming months. Since June 26, rain- and flood-related incidents have killed at least 266 people and injured more than 630 nationwide, according to the National Disaster Management Authority, adding that 1,557 houses had been destroyed. Earlier, Pakistan's economy recorded a growth rate of 2.7% during the fiscal year 2024-25, exceeding earlier projections, according to the latest report issued by the Asian Development Bank (ADB), titled Asian Development Outlook — July 2025. Agencies
Time of India
02-06-2025
- Business
- Time of India
Pakistan inflation rises 3.5% in May, exceeding forecast
Pakistan's Consumer Price Index (CPI) rose 3.5% year-on-year in May, the Statistics Bureau said on Monday, exceeding the Finance Ministry's 1.5% to 2% forecast. The country's economy is on a fragile path to recovery under a $7 billion IMF program requiring reforms and policies that resulted in higher power tariffs and taxes. Annual inflation had dipped to 0.3% in April, its lowest in nearly a decade and a marked fall from 11.8% in May 2024 and a record near 40% a year earlier. The finance ministry in its monthly report said inflation would pick up to between 3% and 4% in June. We're witnessing the base effect fading, that's why there was an uptick in CPI year-on-year," said Adnan Sheikh, deputy head of research at Pak Kuwait Investment Company. "However, price pressures continue to fade which can be seen by two months of consecutive month-on-month deflation, which hasn't happened since January 2021." Live Events Prices in May declined 0.3% from the previous month. Pakistan's planning minister on Monday said that the government expects inflation to average 7.5% in the next fiscal year. The country's central bank, in its half-yearly report released in April, said it expects average inflation for the current fiscal year to end-June of between 5.5% and 7.5%, with the current rate at 4.6%. The central bank cut its main policy rate by 100 basis points to 11% last month, resuming an easing cycle that had brought the rate down from a record high of 22% after a brief pause in March. It said the current rate was sufficient to stabilise inflation within the 5% to 7% range while supporting economic growth but warned of risks from food price volatility, energy price adjustments, and uncertainty in global commodity markets. Pakistan will present its annual budget on June 10 for the 2025-26 financial year, outlining taxation and policy measures that could affect inflation.
Zawya
08-05-2025
- Business
- Zawya
Trading halted on Pakistan's benchmark share index, shares sink 6%
Pakistan's benchmark index closed down 6.7%, recording its largest single-day points drop, while its bonds were also under pressure following reports of drones being shot down in major cities including Karachi and Lahore. Trading at the Pakistan Stock Exchange was halted for an hour on Thursday after the benchmark index plunged 6.3%, a notification from the exchange showed. Pakistan's international bonds were also sold, with the 2036 maturity suffering the biggest losses, down more than 2 cent to be bid at 72.4 cents in the dollar, Tradeweb data showed. Pakistan shot down 25 drones from India that violated its airspace, the military said on Thursday, a day after Indian strikes on multiple targets in the country fanned fears of a larger military conflict between the nuclear-armed neighbours. "Reports of drones being shot down in major cities including Karachi and Lahore pushed the market down more than 6% in a short span of time, triggering a halt," said Adnan Sheikh, head of research at Pak Kuwait Investment Company. The country's benchmark share index had fallen 3.1% on Wednesday. "The situation has raised fears about an escalation between the two counties, and it represents another example of how the Global South is likely to prove increasingly important for the global backdrop," Jim Reid, global head of macro and thematic research at the Deutsche Bank, said in a note. India's Foreign Secretary Vikram Misri said on Thursday that India's executive director at the International Monetary Fund would represent the country's position at a board meeting on Friday, where a $1.3 billion loan to Pakistan will be reviewed. The IMF, in a response to questions from Reuters, said on Wednesday it supported Pakistan's economic programme through its Extended Fund Facility and hoped for a "peaceful resolution and de-escalation between the two parties".
CNA
08-05-2025
- Business
- CNA
Trading halted on Pakistan's benchmark share index, shares sink 6%
KARACHI :Pakistan's benchmark index closed down 6.7 per cent, recording its largest single-day points drop, while its bonds were also under pressure following reports of drones being shot down in major cities including Karachi and Lahore. Trading at the Pakistan Stock Exchange was halted for an hour on Thursday after the benchmark index plunged 6.3 per cent, a notification from the exchange showed. Pakistan's international bonds were also sold, with the 2036 maturity suffering the biggest losses, down more than 2 cent to be bid at 72.4 cents in the dollar, Tradeweb data showed. Pakistan shot down 25 drones from India that violated its airspace, the military said on Thursday, a day after Indian strikes on multiple targets in the country fanned fears of a larger military conflict between the nuclear-armed neighbours. "Reports of drones being shot down in major cities including Karachi and Lahore pushed the market down more than 6 per cent in a short span of time, triggering a halt," said Adnan Sheikh, head of research at Pak Kuwait Investment Company. The country's benchmark share index had fallen 3.1 per cent on Wednesday. "The situation has raised fears about an escalation between the two counties, and it represents another example of how the Global South is likely to prove increasingly important for the global backdrop," Jim Reid, global head of macro and thematic research at the Deutsche Bank, said in a note. India's Foreign Secretary Vikram Misri said on Thursday that India's executive director at the International Monetary Fund would represent the country's position at a board meeting on Friday, where a $1.3 billion loan to Pakistan will be reviewed. The IMF, in a response to questions from Reuters, said on Wednesday it supported Pakistan's economic programme through its Extended Fund Facility and hoped for a "peaceful resolution and de-escalation between the two parties".
