KARACHI: The bond yields in the secondary market have come down by 5-12bps from Wednesday as compared to March 11, 2021 the same are down by 12-65bps.

“We believe the decline in yields is largely due to rising COVID-19 cases in the country, which may potentially delay any rate increase by the Pakistan central bank,” an analyst at Topline Securities said.

He said the appointment of new Finance Minister Shaukat Tarin has also added to this belief as he has been vocal of low interest rates prior to his appointment.

Asad Umar, Minister for Planning, Development and Special Initiatives had said that more restrictions could be announced on Friday, hinting at closing down of major cities if the current trend of COVID-19 continues.

To recall, the Pakistan central bank had delivered emergency rate cuts between March-June 2020 by 625bps to counter loss of economic activity amidst COVID-19 outbreak.

In a survey that was conducted by Topline Securities on March 10, 2021, 92 percent of the participants were expecting increase in interest rates during 2021. The CPI inflation for April 2021 is expected to clock in at 10.7-11.0 percent on year-on-year basis compared to Policy Rate of 7.0 percent, he added.

Copyright Business Recorder, 2021