|
Getting your Trinity Audio player ready...
|
The real interest rate has recently seen a positive upturn, reaching +1.3 percent in March 2024, as reported by Arif Habib Limited (AHL). AHL noted that this marks the first instance of a positive real interest rate in 37 months, spanning just over three years. The last time the real interest rates were positive was in January 2021, standing at +1.35 percent, according to AHL’s data.
This shift occurs amid a recorded inflation rate of 20.7 percent in March 2024. With inflation exhibiting a downward trajectory, there is a growing likelihood of an expanding real positive interest rate in the future, leading to calls for interest rate reductions, as highlighted by the brokerage house. A real interest rate, once adjusted to account for inflationary effects, reflects the genuine cost of funds for borrowers and the actual yield for lenders or investors.
Read Also: Is Pakistan Railways Doomed? Experts Call for Privatization After PIA Sale