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Pakistan cut its target interest rate by 150bp to 20.5%, much more than expectations of a 100bp cut. This comes after inflation slowed more than expected in May. Besides, the inflation measure eased for the fifth consecutive month after domestic food supplies improved and fuel costs fell. Pakistan’s central bank had kept interest rates at 22% since June 2023 to keep a lid on overall prices. Pakistan is currently negotiating a fresh loan program with the IMF, ahead of about $24bn in debt payments in the next fiscal year.
Pakistan’s 8.25% dollar bond due 2025 is currently trading at 95.21, yielding 12.33%.
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