Karachi Interbank Offered Rate (KIBOR) rates for one-week to six-month tenors declined on Friday, indicating market expectations of further monetary easing.
KIBOR represents the average interest rate at which banks are willing to lend money to other banks.
According to the data provided by Arif Habib Limited (AHL), on a day-on-day basis, the one-week KIBOR decreased by 3 basis points (bps) to 11.34%, the two-week tenor rate dropped by 3bps to 11.23%, one-month KIBOR also lost 1bps to 11.16%, the three-month tenor rate was down by 1bps to 10.86%.
The six-month tenor rate clocked in at 10.86%, following a decrease of 1bps. “The 6-month KIBOR has fallen to a 41-month low of 10.86%, last seen on 22-Feb-22, when it stood at 10.83%,” noted AHL.
“The decline in KIBOR comes in anticipation of further rate cut,” said Sana Tawfik, Head of Research at AHL, while speaking to media.
The analyst shared that a 50bps cut is expected in the upcoming policy, supported by low inflation, manageable current account and improved reserve position. However, Tawfik cautioned that risks remain, including recent floods, which may translate into possible food inflation and pressure on PKR parity due to rising imports.
The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is scheduled to meet on Wednesday, July 30. Market analysts expect a 50bps cut in the first MPC meeting of the fiscal year 2025–26.
The central bank, in its previous MPC held on June 16, decided to keep the policy rate unchanged at 11%.
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