Effects of unchanged policy rate at 15 percent by the State Bank of Pakistan (SBP) surfaced as the Pakistan Stock Exchange (PSX) returned towards positivity. Notably, KSE-100 index moved past the 43,000-point level during the trading session on Tuesday.
At around 2:00pm, the benchmark KSE-100 index was being traded at 43,240.19, a gain of 413.53 points or 0.97 percent.
As the central bank maintained key policy rate at 15 percent, the positive sentiments prevailed. On Monday, the index had closed negative for the third consecutive session, driven by political uncertainty and anticipation over monetary policy and, as a result, the benchmark index shed 443.99 points or 1.03 percent to close at 42,826.66.
Read more: Cooling down the economy: SBP keeps the policy rate unchanged at 15pc
The Monetary Policy Committee (MPC) statement read, “with recent inflation developments in line with expectations, domestic demand beginning to moderate and the external position showing some improvement, the MPC felt that it was prudent to take a pause at this stage.”
The MPC also said, “to cool the overheating economy and contain the current account deficit, the policy rate has been raised by a cumulative 800 basis points since last September, some temporary administrative steps have recently been taken to curtail imports, and strong fiscal consolidation is planned for FY23. These actions are expected to work their way through the system over the coming months.”
Moreover, Pakistan Business Council also welcomed the decision taken by the SBP’s MPC in a twitter post.
We welcome the @StateBank_Pak MPC’s decision not to increase the policy rate further. Significant demand and import compression (including targeted non-rate) measures are already in place. Industry is working well below capacity due to import curbs. Recession is a risk.
— The Pakistan Business Council (@ThePBC_Official) August 22, 2022
The council also highlighted that measures taken to curb imports and their demand have already resulted in industry working below capacity.