The Karachi Interbank Offered Rate (KIBOR) surged sharply across all tenors on Tuesday after the State Bank of Pakistan (SBP) raised its policy rate by 100 basis points to 11.50 percent.
This triggered an immediate repricing in the money market. Data released by the central bank showed an across-the-board jump in benchmark lending rates, with the steepest increases recorded in short-term maturities.
Changes:
| Tenor | New KIBOR Rate | Change (bps) |
|---|---|---|
| 1-Week | 11.88% | ▲ 99 bps |
| 2-Week | 11.89% | ▲ 99 bps |
| 1-Month | 11.93% | ▲ 94 bps |
| 3-Month | 11.79% | ▲ 50 bps |
| 6-Month | 11.87% | ▲ 43 bps |
| 9-Month | 12.26% | ▲ 34 bps |
| 1-Year | 12.30% | ▲ 34 bps |
The sharp rise in shorter tenors points to immediate liquidity tightening and aggressive short-term repricing by banks following the central bank’s hawkish move.
Longer tenor increases were comparatively moderate. This means that rates may stabilize in the coming cycles if war shocks ease.
KIBOR had remained in the cool zone for the past few monetary cycles as interbank rates remained relatively stable.
The surge in KIBOR will quickly feed into higher borrowing costs across the economy. Corporates, banks, and consumers are now likely to face increased financing expenses in the coming weeks.
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It should be even higher. We need less borrowing then ever before.
Business love increasing prices but hate paying their loans and avoid tax