200bps rate hike likely in surprise SBP move

An interest rate hike of around 200 basis points by the State Bank of Pakistan (SBP) is highly likely, financial market experts say, after the recent treasury bill auction rates saw a similar increase. While the unexpected rate jump in the government auction to raise domestic debt surprised the trade and industry, the investors in the treasury bills found the situation suitable due to over 27 per cent inflation. The government raised Rs258 billion against the target of Rs300bn in Wednesday’s auction at the rates of 19.95pc, 19.9pc and 19.79pc for the three-month, six-month, and 12-month tenors. The cut-off rates were 195 bps, 206 bps, and 184 bps higher than the previous auction, respectively. The government plans to raise Rs1,800bn in the next auction scheduled for March 8 while the maturity amount is Rs1,785bn.