Govt raises Rs71 billion through PIB auction

KARACHI: The government raised Rs71 billion through the auction of fixed-rate Pakistan Investment Bonds (PIBs) on Wednesday, while the yield on short-duration paper stayed flat.

The amount that was raised was less than the pre-auction target of Rs160 billion. The cut-off yield on a three-year PIB ended unchanged at 19.3499 percent. The yield on 5-year paper stood at 15.9500 percent.

The bids for 10-year paper were rejected by the government, while no bids were received for 15-, 20-, and 30-year papers, according to the SBP's auction result. The State Bank of Pakistan on Monday kept the policy rate unchanged at 22 percent. This was against broader market expectation of a rate hike of 100 basis points.

The SBP's decision was based on the expected decline in inflation trajectory, the downward trend of commodity prices, and range-bound imports in FY2024.Analysts believe that the monetary tightening cycle has largely ended, barring minor adjustments. They expect inflation to remain elevated in the first half of FY2024, before decelerating in the second half, where the beginning of the easing cycle may become a real possibility.

Pakistan's consumer price index (CPI) inflation decreased to 28.3 percent in July from 29.4 percent in the previous month. This came higher than market expectations of 26-27 percent.