Islamabad (National Times)- The State Bank of Pakistan’s unexpected increase in the interest rate shook investors’ confidence on the opening day of the week, as the stock market took a hit with the benchmark KSE-100 index losing more than 700 points Monday morning. <\/p>\n
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index had closed at 42,936.73 points last week. <\/p>\n
SBPs unexpected interest rate hike takes toll on PSX, down by over 700 points
\nHowever, once the market opened, stocks fell by 707 points or 1.65% and at 9:39am it was at 42,229 points. <\/p>\n
Analyst Samiullah Tariq laid blame on SBP’s decision to increase the interest rate as a key factor for the drop in the KSE-100 index. <\/p>\n
“[The] market wasn\u2019t expecting a rate hike. That\u2019s why it is reacting,” the head of research at Pakistan-Kuwait Investment Company told Geo.tv. <\/p>\n
Capital market expert Saad Ali also blamed the “surprise interest rate hike” for the drop, adding that investors may be expecting more hikes given the inflation outlook. <\/p>\n
“Interest rates at 16% or higher is significantly negative for growth and corporate profitability,” Ali told Geo.tv. <\/p>\n
At the time the decision was announced by SBP, the markets had closed, which is why the KSE-100 index today went in the red at the opening. <\/p>\n
SBP hikes interest rate to 16% to curtail inflation
\nOn Friday, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) Friday raised the key policy rate by 100 basis points to 16% \u2014 the highest since 1999.<\/p>\n
The central bank, in a statement, issued after the meeting said that the decision reflects the MPC\u2019s view that inflationary pressures have proven to be stronger and more persistent than expected.<\/p>\n
“This decision is aimed at ensuring that elevated inflation does not become entrenched and that risks to financial stability are contained, thus paving the way for higher growth on a more sustainable basis,” the MPC said.<\/p>\n
The SBP noted that amid the ongoing economic slowdown, inflation is increasingly being driven by persistent global and domestic supply shocks that are raising costs. <\/p>\n","protected":false},"excerpt":{"rendered":"
Islamabad (National Times)- The State Bank of Pakistan’s unexpected increase in the interest rate shook investors’ confidence on the opening day of the week, as the stock market took a hit with the benchmark KSE-100 index losing more than 700 points Monday morning. The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index had closed at 42,936.73 […]<\/p>\n","protected":false},"author":1,"featured_media":50073,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-50072","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-national","entry"],"yoast_head":"\n