The Pakistan Stock Exchange (PSX) started the week on a high note, with the KSE-100 index surging by 2,132.95 points in early trading on Monday. This impressive gain pushed the index to a record 111,646.09 points, up from the previous close of 109,513.14 points.
Investor optimism was fueled by the State Bank of Pakistan’s (SBP) recent decision to cut the policy rate by 200 basis points, bringing it to 13 percent as of December 17, 2024. This move, coupled with improving economic indicators, such as a decline in headline inflation to 4.9 percent year-on-year in November 2024, has boosted market confidence.
The Monetary Policy Committee (MPC) noted that the drop in inflation was largely due to lower food prices and the fading impact of gas tariff hikes from late 2023. However, core inflation, currently at 9.7 percent, remains a concern, with inflation expectations among consumers and businesses fluctuating.
While acknowledging short-term volatility in inflation, the MPC highlighted signs of improved economic growth based on recent high-frequency indicators. The committee expressed confidence in its rate-cut strategy, stating it is effectively managing inflationary and external pressures while supporting sustainable growth.
With this market rally, the PSX demonstrates a positive response to the SBP’s monetary policy adjustments and the broader stabilization of Pakistan’s economic landscape.
