Analysts predict the seventh reduction rate amid low inflation

Karachi:

Most analysts provide on Monday a seventh consecutive interest rate from Pakistan’s Central Bank, amid the first International Monetary Fund (IMF) review of $ 7 billion during the lower inflation in almost a decade.

The Nation of South Asia, which has been linked to cash could unlock a further funding installment if the IMF review was approved prior to the presentation of the June budget, as it seeks the financial reforms assigned by the IMF program.

The Central Bank’s relaxation cycle, one of the most aggressive among emerging markets, follows a series of interest rates cuts totaling 1,000 base points (BPS) in a period of six months that took over the main interest rate at 12%, from a record of 22% in June.

The last cut of 100 Bps was in January. February inflation was 1.5%from the decade, mainly due to a high base a year ago.

A search by Reuters 14 analysts suggests that the central bank can further reduce rates, with a median provision to reduce 50 Bps.

Of the 10 analysts waiting for a interest rate cut, three estimated its size at 100 Bps, one in 75 bps and six in 50 bps. The rest did not see any changes.

Most analysts waiting for a interest rate cut believe that the central bank will stop when rates hit 10.5% to 11% due to the possible increase in inflation. They expect a moderate increase from March to May.

Inflation will “sink” in the first quarter of the year before the gradual increase, said Ahmad Mobeen, Senior S&P Global economist, who expects average inflation of 6.1% for 2025. “S&P Global Hbl Pakistan Manufacturing Increase prices in February 2025 at the fastest pace since October 2024, “he added.

During its last policy meeting, the Central Bank maintained its forecasts for GDP growth all year to 2.5% to 3.5% and predicts that faster growth would help boost the foreign exchange reserves that were indifferent.

“While GDP released a 0.9% increase in the first quarter of the financial year 2025, large -scale production remains in negative territory and production has not yet gained dynamics,” said Sana Tawfik, head of the research at Arif Habib Limited.