Markets Association.
“Going forward, inflation is likely to continue to fall between 2 and 2.5 percent in the coming months.”
The official said yields on Pakistan’s market treasury bills are on the decline, the central bank’s forex reserves are at a comfortable level, the current account deficit is narrowing and recovery in the equity market; and improvement in the macroeconomic indicators signal the State Bank will continue with the soft monetary policy stance.
In a latest auction, yields on a benchmark six-month government paper fell to 7.9869 percent.
Though, the foreign exchange reserves of the central bank are at a comfortable level of $11.2 billion as of March 13, the currency market witnessed some pressure, as the rupee crossed the barrier of 102, trading at 102.08 against the dollar in the interbank market on Friday.
There are some reasons to be optimistic on the outlook of the balance of payments for FY15, the analyst said.
Economists said apart from falling international oil prices, there are some other triggers for the State Bank to reduce the discount rate, major improvement in the external sector of the economy.
The current account deficit narrowed to $1.614 billion in the eight months of the current fiscal year, while posted a surplus of $877 million following strong foreign exchange inflows.
The State Bank received $717 million on account of the Coalition Support Fund, an amount of $43 million from multilateral, bilateral and other sources and $51 million from the International Development Association during February.
Economists see the current account deficit to continue to decline by the end of the current fiscal year.
The International Monetary Fund (IMF) is likely to release six tranches of $550 million by the end of this month.
And, the government has started the process of selling its stake in the Habib Bank Limited (HBL) that would provide forex support to the country.