The government raised Rs16 billion by auctioning fixed-rate Pakistan Investment Bonds (PIBs) through the State Bank of Pakistan (SBP), significantly missing its Rs350 billion target.
According to results released by the SBP, bids for two- and three-year bonds were rejected. The yield on five-year PIBs declined marginally by one basis point to 12.3745 percent, while the 10-year bond yield remained unchanged at 12.79 percent.Â
Analysts attributed the lower-than-expected borrowing to the higher rates demanded by investors compared to the previous auction.
This was the first auction held after the SBP’s unexpected decision to maintain the benchmark policy rate at 12 percent on Monday, pausing its easing cycle due to inflation concerns. The Monetary Policy Committee (MPC) cited volatility in food and energy prices, as well as rising global tariffs, as key risks that could impact inflation.
The SBP noted that pressures on the external account have increased due to rising imports and weak financial inflows. However, the MPC assessed that the current real interest rate remains positive on a forward-looking basis, ensuring macroeconomic stability.
Globally, the SBP warned of heightened uncertainty due to escalating trade tariffs, which could impact global economic growth, trade volumes, and commodity prices. Meanwhile, Pakistan’s consumer price index inflation eased to 1.5 percent in February, the lowest in nearly a decade, down from 2.4 percent in the previous month.
