Pakistan’s central bank has injected a significantly large amount of Rs4.77 trillion into the banking system for up to four weeks to enable conventional and Shariah-compliant banks to meet the cash-strapped government’s financing needs.
Market talk suggests that the State Bank of Pakistan (SBP) supplied a huge liquidity despite excessive funds with commercial banks as increased liquidity would encourage them to lend more to the government at reduced rates.
Secondly, the central bank was signaling markets through the release of heavy financing that it may consider cutting its policy rate earlier than expected, potentially in December.
