The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) again announced an increase in the policy rate (interest rate) by 100 basis points (bps) or 1%, to 9.75%. The MPC said that this is being done to address inflation in the country.
TANGENT is of the firm view, as it was during the rate rises in 2018, that this is extremely detrimental to Pakistan and the economy. The root of all of this inflation is supply oriented and fiscal mismanagement, not monetary in nature. With the rise in remittances and growth in the economy, this rise in interest rates will severely hamper sustainable growth.
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