��������

ISLAMABAD: An army major and a sepoy were killed during an intelligence-based operation in Pakistan's southwestern Mastung district, the military's media wing said on Thursday amid Islamabad's battle against surging militancy. 

The latest operation took place in Balochistan's Mastung district on July 23 when security forces received reports of the presence of "terrorists" belonging to "Fitna al Hindustan," a term the Pakistani military uses for militants it says are backed by neighbor and archrival India.

The military said three militants were killed during its counterterror operation. However, Major Zeeyyad Salim Awal, 31, and Sepoy Nazam Hussain, 22, were killed during the exchange of fire, the military's media wing said. 

"Sanitization operation is being conducted to eliminate any other Indian sponsored terrorist found in the area, as the security forces of Pakistan are determined to wipe out the menace of Indian Sponsored Terrorism from the country," the military said. 

"And such sacrifices of our brave men further strengthen our resolve."

Pakistan's restive Balochistan province has long been the site of separatist and insurgent violence, and Islamabad has frequently alleged Indian involvement in destabilizing activities there, a charge New Delhi denies.

India accuses Pakistan of training and funding militant groups in the part of disputed Kashmir that New Delhi administers. Islamabad denies the allegations and says it only extends diplomatic support to the people of Kashmir. 

The two countries engaged in the worst fighting between them since 1998 in May this year, pounding each other with drones, fighter jets, missiles and artillery fire before Washington brokered a ceasefire on May 10. 

KARACHI: Pakistan’s central bank has room to slash the key interest rate by 100 basis points by December, financial analysts said on Thursday, noting that the move would reduce financing costs and boost productivity in the country.

The central bank’s Monetary Policy Committee (MPC) is scheduled to hold its meeting on July 30 to decide about the key interest rate. A majority of financial market participants expect the central bank to cut its key interest rate by 50 to 100 basis points next week, as per a report by Karachi-based brokerage firm Topline Securities. A majority, 56 percent, expect a 50 to 100 basis points rate cut next week, the report said while thirty-seven percent expect the policy rate to remain unchanged at 11 percent.

The findings reflect growing market confidence that declining inflation and easing global oil prices have created space for monetary easing. In its last meeting, the State Bank of Pakistan (SBP) kept the policy rate unchanged at 11 percent, citing uncertainty over the federal budget and regional tensions in the Middle East. This time, a stronger consensus appears to be building toward a rate cut.

“We are expecting inflation to average 5-7 percent in FY26, leaving a room of a total of 100 basis points cut in our view after adjusting it for real rate of 400 basis points,” Shankar Talreja, Topline Securities’ head of research, told Arab News.

Talreja said he expected the SBP to announce a policy rate cut of 50 basis points when it meets next week.

“We are expecting the policy rate to bottom out at 10 percent by December 2025,” he said.

Shahid Ali Habib, the chief executive officer at brokerage research firm Arif Habib Ltd., said he also expected the interest rate to be slashed by 50 basis points. The SBP has slashed the key policy rate by an aggressive 11,000 points from a record 22 percent over the last one year, as inflation eases in the South Asian country.

“A rate cut now could reduce financing costs, boost productivity and support recovery after a modest 2.68 percent GDP growth in FY25,” Habib said.

The expectations come as Prime Minister Shehbaz Sharif’s government aims to increase the GDP of Pakistan’s debt-ridden economy by 4.2 percent this year, up from the 2.7 percent last fiscal year.

Backed by the International Monetary Fund’s $7 billion loan, Pakistan’s economy has stabilized in recent months with inflation ebbing to 3.2 percent in June and the current account showing a surplus of $328 million last month.

Pakistan’s easing inflationary pressures have been the main driving force behind the central bank’s aggressive policy rate cuts. Habib said Pakistan’s macroeconomic situation was improving, saying that he sees FY26 inflation averaging on 5.4 percent and core inflation at around 8 percent this fiscal year.

However, Talreja said the decline in borrowing costs could be a “non-event” for Pakistan’s booming stock market, which has already factored in the expected change.

Pakistani stocks have risen 19 percent since January with the benchmark KSE-100 Index hitting a record 140,585 points during intraday trading last week, according to the Pakistan Stock Exchange data.

“The majority of the impact is already taken by the markets, the treasury bills are trading at 10.7 percent which already incorporates around 50 basis points cut,” Talreja noted.

Talreja said if slashed further, the policy rate will nonetheless provide some respite to businesses as the cost of financing will further come down.

“Honestly, either 50 or 100 basis points won’t matter significantly as we have already eased over 11,00 basis points in the last one year,” the analyst said.