6-Month KIBOR Falls Sharply As SBP Maintains Key Interest Rate

The 6-Month Karachi Inter-Bank Offered Rate (KIBOR), a benchmark for lending to consumers and businesses, fell by 159 basis points (bps) on a day-on-day (DoD) basis after the central bank decided to maintain its key policy rate at 22 percent.

According to the State Bank of Pakistan (SBP) data, the 6-month KIBOR clocked in at 23.09 percent despite last week’s secondary market theatrics which saw the government raise debt at exorbitant lending rates.

The other widely used 3-Month KIBOR was down 124 bps and was recorded at 22.8 percent. The 1-year KIBOR slid by 161 bps to 23.43 percent.

A similar declining trend was also seen today in Treasury Bill rates. The rate on the 3-month paper went down from Thursday’s 23.78 percent to 22.5 percent today, according to CEO Topline Securities Mohammed Sohail.

On Thursday, the SBP’s Monetary Policy Committee (MPC) in an unexpected decision kept interest rates unchanged at 22 percent despite earlier forecasts of a 200-300 bps hike following the regulator’s auction of Treasury Bills which saw lending rates spike up to 25.06 percent.

The MPC took into account the latest inflation outturn reflecting the continuing declining trend in inflation from its peak of 38 percent in May to 27.4 percent in August 2023. The committee said real interest rates continue to remain in positive territory on a forward-looking basis.

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