For Duffers at SBP, Read Where World is Heading, then Learn from it

[Altruist]

Chart: The Downward Spiral in Interest Rates

As interest rates continue their historic spiral downwards, the world's central banks are running out of conventional tools to settle markets.

www.visualcapitalist.com

Global Rate Slashing
Since only the beginning of March, the world’s central banks have cut interest rates on 37 separate occasions.

Here’s a look at cumulative interest rate cuts by some of the world’s most important central banks, from January 1, 2020 until today:

US -150 to 0.00%

Saudi Arabia -125 to 1.00%

Canada -100 to 0.75%

UK -50 to 0.25%

Brazil -25 to 4.25%

Australia -25 to 0.5%

China -10 to 4.05%

Japan 0 to 0.10%

European 0 to 0.00%

Switzerland 0 to -0.75%


Going into the year, rates in developed economies were already between 0% and 2%.

Despite not having much room to work with, banks have slashed rates where they can — and now out of major developed economies, Canada has the “highest” interest rate at just 0.75%.

Helicopters on the Horizon
With central banks running out of ammo for the use of traditional measures, the conversation is quickly shifting to unconventional measures such as “helicopter money” and NIRP.

Life is already surreal as societal measures to defend against the spread of COVID-19 unfold; pretty soon, monetary measures taken around the globe may seem just as bizarre.

Put another way, unless something changes fast and miraculously, we could be moving into an unprecedented monetary environment where up is down, and down is up. At that point, it’s anybody’s guess as to how things will shake out going forward.

(Please, unless you have clue about the subject keep your two-cents to yourself and don't waste everyone's time by writing nonsense)

In the US, inflation in 2020 is 2.73%. So if inflation is factored in then basically the US interest rate is -2.73%.

 

[Ali Sha]

SBP needed to aggressively cut interest rates today. They don't have to invent the wheel. Just look at the entire world and what they are doing. Yeh tu woh puncture ke dukan wala chutiya Ishaq Dar se bhi gandi economy ko handle ker rhay hain. RIP Pakistan. We are sorry to have made you bleed by our incompetency.

 

[Wake up Pak]

All the economists are on this forum.
Why don't you fikin get a real job?
Looser morons.

 

[KhanSuppporter]

It works for countries with very little inflation. If there’s 15% inflation in Pakistan, by the end of the year your 100 RS are equal to 85 RS. If you lend 100 RS to someone for one year at no interest and get paid off after 12 months you are getting 85 RS instead. Would you do that?
Having that said, I think we can have a huge economic boost if the government were to introduce interest free loans. This boost can offset the money lost in interest.

 

[Nadir Bashir]

Ok technically there shall be no interest in the economy.
Ok if interest rate is reduced, what will we achieve? Can you explain?

How it will easy the life of the people while public borrowing is almost zero even before high inflation?

 

[Nadir Bashir]

It works for countries with very little inflation. If there’s 15% inflation in Pakistan, by the end of the year your 100 RS are equal to 85 RS. If you lend 100 RS to someone for one year at no interest and get paid off after 12 months you are getting 85 RS instead. Would you do that?
Having that said, I think we can have a huge economic boost if the government were to introduce interest free loans. This boost can offset the money lost in interest.

Ok let us suppose, interest is reduced then what will happen?
In Pakistan, only business sector borrows money. Business sector needs this money to import new business machinery and equipment. For that you need dollars. From where these dollars will come?
Interest rate if reduced will give rise to inflation.........nothing else will happen

 

[Geek]

اوکے اپ نے کہا تو ہے کہ اگر اکانومی کا کسی کو نہیں پتہ تو وہ کمنٹ نہ کرے لیکن میں پھر بھی کر رہا ہوں کیوں کہ میرےئ ذہن میں ایک سوال ہے ۔۔ کہ اپ نے اوپر جتنے ملکوں کے نام لکھے ان میں سے کتنے اس وقت آئی ایم ایف پروگرام میں ہیں ؟

 

[stoic]

It would be easy to agree with people posting here about their solutions for the economy if they could post their academic credentials and/or their experience and background in managing these kinds of situations.
Especially if they are challenging SBP governer's decisions.

 

[webnise]

This comparison between Pak and UK/USA is laughable. Do we know the realities of Pak economy, tax collection, GDP and we expect to keep the IR as we cannot afford