Finance Minister Muhammad Aurangzeb’s suggestion of potential rate cuts in the coming months, coupled with Pakistan’s progress in meeting IMF conditions, spurred a significant surge in the stock market, with the KSE-100 Index rising by 1.59 percent on Thursday.
Investors capitalized on recent selling pressure, engaging in bargain hunting to exploit opportunities presented by lower-than-usual prices.
The benchmark KSE-100 Index reclaimed the 65,000 mark, closing at 65,064.26 after gaining 1,015.82 points, reversing some of the substantial losses incurred over the previous two days.
The ongoing second and final review of Pakistan’s performance under the $3 billion Stand-By Arrangement (SBA) with the IMF in Islamabad suggests smooth progress towards meeting IMF targets. This progress implies unhindered access to the remaining $1.1 billion disbursement.
Anticipation for a rate cut intensified following Aurangzeb’s interview outlining his economic vision. He hinted at the possibility of interest rate reductions during the year, indicating a proactive approach to economic management.
However, contrasting opinions persist among experts, with a recent Reuters poll indicating a majority forecasting the State Bank of Pakistan (SBP) to maintain the interest rates at the current 22 percent, an all-time high.
Nonetheless, the same poll forecasts a potential rate cut in the April-June quarter, aligning with the next Monetary Policy Committee meeting scheduled for May.
However, external factors, such as the Federal Reserve’s speculated rate cuts in June, could influence Pakistan’s decision-making regarding monetary policy, potentially delaying anticipated easing measures.
