KARACHI - In line with the surge of 81 basis points in the six-month Karachi Interbank Offer Rate (KIBOR), the State Bank is expected to jack up further the discount rate in the range between 50bps to 100bps, money market sources said on Tuesday.  However, there is unlikely to see major rise in KIBOR in the short-run as the capital market is already set to face the probable monetary tightening stance. While talking to The Nation capital market sources said that the banks' average offer rates for 6-month had witnessed sharp rise since the beginning of May 2008, going up to 11.9 percent, with a hike of 81bps to date. This bodes well for commercial banks in the short run as most of their advance portfolio is referenced to KIBOR; it also raises the strongest possible hint of anticipation of a discount rate hike by State bank of Pakistan (SBP), said sources. Due to double digit CPI inflation growth (10.27 percent recorded in ten months of FY08), negative real interest rates and strong credit demand from the private sector for oil payments and wheat procurements, hence there was strong market expectation that SBP would continue with its monetary tightening stance and raise discount rates by 50-75 bps in the coming financial year and also raise the policy discount rate by 50to 75 basis points (bps), analysts said. It is worth mentioning that since the recent policy changes in January 2008 the current monetary policy stance and measures are not transmitting properly owing to already higher lending rates that are hurting economic growth as well as fiscal deficit of the government.  Thus the KIBORs, the benchmark for banks' lending rates, would follow the increase in the policy discount rates, pointed out some analysts. Capital market sources said till the end of financial closing, as of June 01, 2008, banks would  complete loan book closing and they would try to narrow gap between deposits  and advances by borrowing money from market which would result into major  increase in short-period KIBOR rates.   SBP daily updated KIBOR rates for various tenors showed that as on May 18, 2008, the KIOR for the one week surged to 10.77pc, for one month and 11.03 percent for three months respectively.