Already a Bloomberg.com user?
Sign in with the same account.
Oct. 3 (Bloomberg) -- Pakistan’s inflation slowed for a second straight month in September, giving policy makers more scope to cut interest rates to bolster economic growth.
Consumer prices rose 10.46 percent from a year earlier, after climbing 11.56 percent in August, the Federal Bureau of Statistics said in Islamabad today. The median of six estimates in a Bloomberg News survey was for a 10.65 percent gain. The bureau in August changed the base year for inflation to 2008 from 2001.
Pakistan’s central bank unexpectedly cut rates in its most recent policy decision on July 30, breaking away from Asian neighbors such as India and Malaysia that have increased borrowing costs or kept them steady in recent months to tame inflation. Growing public debt and living costs have fanned Pakistan’s 10-year government bond yields to the highest level after Greece and Venezuela, according to data compiled by Bloomberg.
“The biggest contributor to the slowing inflation rate is the relative stability in food prices,” Khalid Iqbal Siddiqui, head of research at Invest & Finance Securities Ltd. in Karachi, said before the report. “I am expecting a 100 basis-point cut in rates in the next meeting.”
The State Bank of Pakistan reduced the discount rate in July to 13.5 percent from 14 percent. The central bank’s next monetary policy announcement is scheduled for Oct. 8, and three of five economists surveyed by Bloomberg News predict the rate will be lowered to 12.5 percent. The other two expect a 50 basis-point cut to 13 percent.
Government borrowing for budgetary support rose 23 percent to 224 billion rupees ($2.56 billion) in the fiscal year starting July 1 from a year earlier, according to data on the State Bank of Pakistan’s website. The government announced this year that it plans to maintain zero net borrowing from the central bank to contain inflation, one of the highest in Asia.
The International Monetary Fund forecasts Pakistan’s economy will expand 2.56 percent in 2011, the slowest pace since the 1.72 percent growth in 2009.
--With assistance from Manish Modi in New Delhi. Editors: Shamim Adam, Cherian Thomas
To contact the reporter on this story: Haris Anwar in Islamabad at Hanwar2@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at firstname.lastname@example.org