The Pakistan Stock Exchange (PSX) opened on a strong note Tuesday. The benchmark KSE-100 Index surged after the State Bank of Pakistan (SBP) delivered an unexpected interest rate cut.
The central bank reduced the policy rate by 100 basis points to 11%. This is the largest cut since June 2024. The move signals easing inflation and improving economic outlook despite geopolitical risks.
The KSE-100 Index jumped to an intraday high of 115,093.10. That’s a gain of 990.87 points, or 0.87%, over Monday’s close of 114,102.23. Even the day’s lowest level, 114,203.13, marked a gain of over 100 points.
Investors welcomed the bold move by the SBP. Amreen Soorani, Head of Research at Al Meezan Investment, said, “The market is buoyed by the SBP’s 100bps policy rate cut. It signals a return to monetary easing that few had predicted.”
She added that better macroeconomic indicators and strong forex inflows expected in the next two months are boosting confidence. “After a volatile April, investor sentiment seems to be recovering,” she said.
Surprised for Analysts
The SBP’s decision surprised many analysts. Most expected a smaller 50 bps cut or no change. The central bank’s statement cited easing inflation and a need to support growth amid global uncertainties.
The new rate is the lowest since 2022. The SBP has now slashed the rate by a total of 1,100 basis points in the past 11 months.
The rate cut follows signs of cooling inflation. It also comes amid regional tensions and fears over new U.S. tariffs. Analysts say the SBP acted to stay ahead of global headwinds.
On Monday, markets had closed largely flat as investors waited for clarity. The KSE-100 index dipped by 11.7 points to end at 114,102.23. It had swung between a high of 114,552.21 and a low of 113,077.67.
Tuesday’s rally shows renewed optimism. Analysts believe the market could maintain momentum if macro trends remain stable.
The PSX’s strong start signals growing confidence in Pakistan’s economic direction. With monetary easing in motion, investors appear ready to re-engage.
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