KARACHI – The Pakistan Stock Exchange (PSX) opened the new business week on a positive note as it has registered massive gains in early trading on Monday.
The KSE-100 index benchmark gained 2,132.95 points to hit all-time high of 111,646.09 points as compared to previous close of 109,513.14 points.
A recent cut in policy rate by State Bank of Pakistan (SBP) has boosted the confidence of investors amid positive economic indicators, including reduction in inflation rate.
Last week, the central bank cut the key policy rate by 200 bps to 13 per cent. As per the decision taken by the Monetary Policy Committee (MPC) on Monday, the new policy rate will be effective from December 17, 2024.
SBP’s MPC has decreased the key policy rate after taking into account various indicators, including the headline inflation which declined to 4.9 per cent on year on year basis in November 2024.
This deceleration was mainly driven by continued decline in food inflation as well as the phasing out of the impact of the hike in gas tariffs in November 2023. However, the Committee noted that core inflation, at 9.7 percent, is proving to be sticky, whereas inflation expectations of consumers and businesses remain volatile.
To this effect, the Committee reiterated its previous assessment that inflation may remain volatile in the near term before stabilizing in the target range. At the same time, the growth prospects have somewhat improved, as reflected by the recent uptick in high-frequency indicators of economic activity.
Overall, the Committee assessed that its approach of measured policy rate cuts is keeping inflationary and external account pressures in check, while supporting economic growth on a sustainable basis.
