SBP Monetary Policy Rate just Hiked for the First Time in 3 yearKSE 100 IndexPSX_DLY:KSE100TrademyIOSo SBP raised rates yesterday. 100 basis points, up to 11.5%. Hadn't done that since 2023. I want to talk about what happened the last time they started hiking, because most people have already forgotten how bad it got. September 2021. SBP was at 7%. The economy was running hot, inflation was building, and the central bank started doing what central banks do. They hiked. And then they kept hiking. 7.25. 8.75. 9.75. 12.25. It didn't stop until they hit 22% in mid-2023, and then they just held it there for a full year. Look at the chart. Our SBP Rate Tracker paints the background red during tightening and green during easing. The red zone from 2021 to 2024 is brutal to look at. The KSE-100 was around 45,000 when the hiking started. Two years later, with rates at 22%, it was still hovering around the same level. Two years of nothing. Meanwhile inflation hit 38%, the rupee went from 170 to 280, the country was on the edge of default, and anyone with cash in a bank deposit was earning 20%+ risk-free. Why would anyone buy stocks in that environment? That's what tightening does to this market. It doesn't always crash it. Sometimes it just suffocates it. Now look at what happened the moment they reversed. June 2024, first cut. Background goes green. And the market took off, 75,000 to 189,556 in eighteen months. Every single rate cut on the chart lines up with another leg higher. The correlation is almost absurd. That rally is over now. Yesterday's hike happened because of the Middle East situation. Oil is elevated, the Strait of Hormuz is a mess, inflation is back at 7.3% and expected to hit double digits, and the MPC basically said more hikes are on the table if things don't calm down. I pulled some numbers from historical SBP cycles going back to 1992. Pakistan has had 15 complete rate cycles, 8 tightening, 7 easing. They alternate every time. During hiking cycles, the KSE-100 loses about 3% on average. The worst one dropped the market 25%. During easing cycles, the average return is 28%, and the best one delivered 79%. So here's the uncomfortable truth: if you're looking at that red background on the chart right now, history says this isn't the time to be aggressive in equities. But here's the other side of it. Every tightening cycle in Pakistan's history has ended. Every single one. And the green that follows has always been worth waiting for. I'm not selling anything here. I'm just reading the chart. The background is red. Act accordingly. Also, our SBP Rate Tracker indicator is free. It dynamically loads the rate on chart the moment it is decided.