**The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index experienced a bullish start to the week on Monday, rising by over 1% in early trading. By 12:15 pm, the KSE-100 had reached 78,818.54, marking an increase of 789.04 points, or 1.01%.
Key sectors driving this positive trend included cement, fertilizer, oil and gas exploration, and the automobile industry.
The boost in the stock market comes ahead of the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) meeting, where a decision on the key policy rate is expected. Analysts from Arif Habib Limited (AHL) anticipate that the SBP might ease its monetary policy further, due to a downward trend in inflation and improving economic conditions. A recent poll indicated that 55.7% of respondents predict a reduction in the policy rate.
This policy meeting will be the first following Pakistan’s agreement with the International Monetary Fund (IMF) for a $7 billion, 37-month loan program, which requires approval from the IMF’s Executive Board and confirmation of financing from Pakistan’s development and bilateral partners, including Saudi Arabia, the UAE, and China.
In June, the SBP had reduced the key interest rate by 150 basis points from an all-time high of 22%, marking its first cut in nearly four years to stimulate growth amid a sharp drop in retail inflation. Pakistan’s inflation rate stood at 12.6% year-on-year in June 2024, up from 11.8% in May.
Globally, Asian markets also showed positive movement, with a week ahead packed with earnings reports and central bank meetings in the US, UK, and Japan, potentially affecting borrowing costs and economic policies.**