• Economy: CPI inflation for April 2015 clocked in at 2.1% YoY vis-a-vis 2.5% YoY recorded last month.
  • Albeit slightly higher than our expectation of 1.8% YoY, it is a fresh low this fiscal year on the back of (1) lower fuel prices and (2) decline in prices of Perishable Food items.
  • On a MoM basis however, CPI inflation increased by 1.3% (vs. 0.2% in March 2015 and preceding 6-month average of -0.3%) driven by uptick in Food inflation.
  • Overall in 10MFY15, CPI inflation stands at a modest 4.8% YoY as compared to 8.7% YoY in the corresponding period last year (down 388bps).
  • We believe SBP has enough room for 50-100bps rate cut in May as real interest rates hover at ~500bps vs. 10-year historical average of ~300bps.

Pakistan Economy