SBP injects Rs1.186 trillion into banks via OMO

KARACHI: The State Bank of Pakistan (SBP) injected Rs1.186 trillion liquidity into the money market through an open market operation (OMO) on Tuesday for a 73-day period at 13.97 percent, the OMO result showed.

The offered amount for this OMO was Rs1.371 trillion.

The SBP also conducted Shariah-compliant Mudarabah-based OMO on the same day, injecting Rs3 billion for 73 days at 13.99 percent into the Islamic banking institutions.

The State Bank of Pakistan conducted an OMO for a second consecutive day on Tuesday.

Analysts said the rejection of OMO last night caused yields to go up in the morning in the secondary market.

However, the State Bank of Pakistan invited bids again today, which calmed the market.

Yields are now expected to stay in the range as there is a lot of liquidity injection by the SBP, said an analyst.

The Monetary Policy Committee of SBP will meet on Thursday to decide on monetary policy, the SBP said in a statement where analysts and market participants expect the SBP to hike rates further by 100-150 basis points at the upcoming policy review.

“We expect a further hike in policy rates going ahead as the SBP is likely to increase rates owing to inflation and external account concerns,” said Topline in a note.

Consumer price index inflation rose 6 percent month-on-month to 21.3 percent in May.

This takes FY2022 Inflation to 12.1 percent which is the highest after FY2011 when inflation clocked in at 13.7 percent.

The SBP raised the policy rate by 150 bps to 13.75 percent in May. Interest rates should also stay stable in upcoming policy, according to some analysts.