SBP Likely to Lower Key Interest Rate, Market Predicts for Next Week
A recent survey conducted by JS Global among high-net-worth individuals and financial institutions reveals strong expectations for a significant rate reduction. The survey indicates that 47 percent of respondents expect a 100 basis points cut, while 31 percent anticipate a more aggressive reduction of 150 basis points, which would bring the current rate down from 20.5 percent to 19 percent.
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Investor sentiment suggests a potential disconnect between rate cuts and subsequent declines in secondary market yields following the monetary policy statement (MPS). This implies that the market may have already factored in a substantial portion of the expected rate reduction. This is evidenced by the historically wide yield curve, with the 12-month yield at 18.3 percent and the discount rate at 21.5 percent.
