Analysts at Karachi Stock Exchange are expecting some rate cut in key policy rates in today's monetary policy. State Bank of Pakistan is scheduled to announce the last monetary policy of the current fiscal year on Saturday whereas investors expect a possible rate cut of 50bps.
An analyst Yawar Zaman at Aba Ali Habib securities said: "Our prediction come on the back of better economic outlook where Pakistan is expected to receive $550 million in the first week of June-2014 amid controlled-inflation numbers, averaged at 8.7 per cent till April and sustainability in Pak rupee dollar parity provides a room for 50bps cut in the discount rate."
According to a broker, better foreign flows and decline in government borrowings from SBP provided healthy Net Foreign Asset (NFA) and Net Domestic Asset (NDA) position, resulting in to a possible decline in inflation numbers ahead. At this point in time, where all things are moving in the right direction, business community is asking for incentives in the policy rate and watching desperately towards government to pass on the impact of 6-7 per cent rupee appreciation and controlled inflation, whereas they blame the IMF as the only hurdle behind the decrease in discount rate, brokers opined.
Analyst Ahsan Mehanti at Arif Habib Corporation said as the IMF restricted government not to reduce tax base so we thought there would be a status quo. Market sentiments are highly stable and it will not get affected by any change in monetary policy. KSE has a multiple dynamics so any change will be positive for market. If policy rate decreases, it will be good for leverage sector, and if it increases, it will be beneficial for banking and oil sector, he added.
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