The State Bank of Pakistan’s unanticipated increase in the interest rate shook investors’ confidence on the opening day of the week, as the stock request took a hit with the standard KSE-100 indicator losing further than 700 points Monday morning.
The Pakistan Stock Exchange’s(PSX) standard KSE- 100 indicator had closed at points last week.
SBPs unanticipated interest rate hike takes risk on PSX, down by over 700 points still, once the request opened, stocks fell by 707 points or1.65 and at 939 am it was at,229 points.
Critic Samiullah Tariq laid blame on SBP’s decision to increase the interest rate as a crucial factor for the drop in the KSE- 100 indicator.
“(The) request was n’t awaiting a rate hike. That’s why it’s replying,” the head of exploration at Pakistan- Kuwait Investment Company toldGeo.tv.
Capital request expert Saad Ali also criticized the “surprise interest rate hike” for the drop, adding that investors may be awaiting further hikes given the affectation outlook.
“Interest rates at 16 or advanced is significantly negative for growth and commercial profitability,” Ali toldGeo.tv.
At the time the decision was blazoned by SBP, the requests had closed, which is why the KSE- 100 indicator moment went in the red at the opening.
SBP hikes interest rate to 16 to dock affectation
On Friday, the Monetary Policy Committee(MPC) of the State Bank of Pakistan(SBP) Friday raised the crucial policy rate by 100 base points to 16 — the loftiest since 1999.
The central bank, in a statement, issued after the meeting said that the decision reflects the MPC’s view that inflationary pressures have proven to be stronger and further patient than anticipated.
“This decision is aimed at icing that elevated affectation doesn’t come settled and that pitfall to fiscal stability are contained, therefore paving the way for advanced growth on a more sustainable base,” the MPC said.
The SBP noted that amid the ongoing profitable retardation, affectation is decreasingly being driven by patient global and domestic force shocks that are raising costs.