Amin Khan 1
Chief Minister (5k+ posts)
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State Bank of Pakistan announces increase in interest rate by 1.5 percent
- Thread starter Amin Khan 1
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adeel.zafar
Senator (1k+ posts)
is it good thing or bad thing?
jigrot
Minister (2k+ posts)
It is for inflation.
One way to reduce inflation but it will increase the cost of doing business. No other choices. It might help to reduce inflation.
Inqalabi
Senator (1k+ posts)
In current situation it is good...
Hunain Khalid
Chief Minister (5k+ posts)
KARACHI: The State Bank of Pakistan (SBP) has hiked key interest rate by 150 basis points to 91-month(nearly eight years) high at 12.25% in anticipation of acceleration in inflation under the International Monetary Fund’s (IMF) loan programme on Monday.
The monetary policy committee at the central bank tightened the policy keeping in view the rising inflationary pressure due to rupee depreciation, potential increase in utility tariffs and uptrend in prices of petroleum products and essential food items at world markets.
The rate of inflation is expected to accelerate to five-year high at 9.59% in May compared to 8.82% in the previous month of April.
Secondly, speculation at local capital markets suggest the government agreed to increase the key interest rate by two percentage points under IMF’s 39-month long loan programme worth $6 billion. The rate-hike was a must to get IMF board’s final approval for execution of the loan programme.
The government entered into the IMF programme on May 12 and the IMF board is expected to meet sometime in June.
With the latest increase, the key interest rate has surged by a total of 6.5 percentage points since January 2018.
The IMF adopts a pro-active approach, meaning it convinces loan-acquiring countries to keep the interest rate higher than the projected rate of inflation in future rather than existing rate of inflation, Emerging Economics Research MD Muzammil Aslam explained.
“Inflation is set to be in double digits in July,” Sherman Securities’ analyst Chandar Kumar said.
Inflation would grow in the backdrop of rupee depreciation against the dollar, increase in petroleum oil prices in the international and domestic markets, and a further increase in power and gas tariffs in the near future, he said.
Aslam said considering for a while Pakistan had not entered into an IMF loan programme, then there was apparently no immediate need for the latest interest rate-hike.
Interest rate at 10.75% was much higher than the average rate of actual inflation at 7% for the first 10 months (Jul-Apr) of the current fiscal year 2019, he pointed out.
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Does IK have any plans what to tell the people what how much PKR will depreciate against dollar or he is sleeping?
kakamuna420
Chief Minister (5k+ posts)
Mqm destroyed karachi too with their irani target killerd
stranger
Chief Minister (5k+ posts)
its good in a way that people will spend less money and prefer to keep money in banks to get more income. that will reduce demand because people will save more and spend less and that will reduce prices.
on the other hand, it will increase cost of business as business will not be able to borrow money on high interest rates, it will also reduce economic activity and will reduce the GDP growth.
as long as we have high debt we will suffer one way or the other. I wish PTI get rid of foreign dept at the cost of GDP in its tenure.
adeel.zafar
Senator (1k+ posts)
thank you very much for your detailed explanation
AhmadSaleem264
Minister (2k+ posts)
Yes but it will not increase the pressure on foreign investors as rupee has been depreciated against the dollar
