Karachi: The State Bank of Pakistan (SBP) hiked the key interest rate from 7% to 7.25 % in a major policy move – which is the first hike in two years, news sources reported. The new interest rate will be in place for the next two months and will come into effect on October 1.
Reportedly, the increase of 25 basis points is expected to bridge the gap between the economic growth and increasing trade deficit, while also minimising the inflationary pressures.
To this effect, a statement was issued on Monday (September 20) following a meeting of the Monetary Policy Committee (MPC), which proposed a 25 basis point increase in the interest rate. According to the report, MPC approved the policy adjustment based on recent developments and the quick recovery of the economy following the COVID-19 shutdown. In June 2020, the SBP reduced the interest rate from 13.25% to 7% in order to keep the pandemic-afflicted economy afloat and keep inflation under control. However, in response to rising imports and a widening current account deficit (CAD), the government opted to reinstate these hikes.
Nauman Ahmad is an imaginative Pisces whose love for literature and nature is unparalleled. When he's not reading or hiking, he's sleeping and eating, which gives him plenty of energy for his next adventure.
