Following the State Bank of Pakistan’s (SBP) decision to keep the interest rate unchanged at 12%, Karachi Interbank Offered Rate (KIBOR) rates for one-week to one-year tenors rose on Tuesday.
KIBOR represents the average interest rate at which banks are willing to lend money to other banks.
According to the data provided by Arif Habib Limited (AHL), on a day-on-day basis, the one-week KIBOR increased by 34 basis points (bps) to 12.41%, the two-week tenor rate jumped by 37bps to 12.4%, one-month KIBOR rose by 41bps to 12.35%, the three-month tenor rate was up by 19bps to 12.05%, six-month KIBOR increased by 22bps to 12%.
The nine-month tenor rate clocked in at 12.15%, following an increase of 19bps and 1-year tenor rate increased by 16bps to 12.13%.
On Monday, the SBP kept its key interest rate unchanged at 12%. This decision came as a surprise as markets and analysts anticipated a rate cut of 50bps amid a lower inflation reading in February.
“The steep fall in prices of perishable food items reinforced the impact of sufficient stocks of major non-perishable items on overall food prices,” the MPC said in a statement.
“Similarly, energy prices continued to benefit from the moderation in global oil prices, stable exchange rate and favourable base effect. “However, core inflation is still at an elevated level and is proving stickier than anticipated.”
The MPC assessed inflation to come down further before gradually inching up and stabilizing within the target range of 5 – 7%.
“This inflation outlook, however, is susceptible to risks emanating mainly from volatility in food prices, timing and magnitude of energy price adjustments, additional revenue measures, protectionist policies in major economies and uncertain outlook of global commodity prices,” it added.
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