Macroeconomic Forecast Pakistan

Consumer price inflation (CPI) moderated slightly to 13.1% in May, from 13.3% in the month prior. The reading is in line with our view that high levels of inflation in the Pakistan economy will persist over the medium-term, limiting the scope for the State Bank of Pakistan to utilise interest rate cuts to stoke domestic demand. We forecast CPI at 13.1% by end-FY2009/10 (July-June), dropping to 10.1% over the course of FY2010/11.

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