Since the last Monetary Policy Committee (MPC) meeting in July 2024, KIBOR rates have significantly declined, with the 3M, 6M, and 12M rates dropping by 171bps, 173bps, and 131bps, respectively, brokerage house Arif Habib Limited (AHL) highlighted in a brief note today.
AHL said currently, the spread between KIBOR and the policy rate stands at -183bps (3M), -193bps (6M), and -231bps (12M). A 5-year historical average shows the spread used to be +45bps for 3M, +55bps for 6M, and +71bps for 12M, with KIBOR previously above the policy rate.
This indicates that the market has been anticipating not only a continuation of the rate cut cycle but also expects a substantial cut in today’s policy announcement, the brokerage house said.
The brokerage house said it projects the MPC to announce a 150bps cut, bringing the policy rate down to 18 percent.