The State Bank of Pakistan has released a statement announcing its decision to maintain the interest rate at 22 percent. This decision was reached during a meeting of the Monetary Policy Committee.
The statement highlighted the backdrop of rising inflation in Pakistan. In May, inflation was recorded at a worrisome rate of 38 percent. However, by August 2023, the rate of inflation had moderated slightly to 27.4 percent. These inflationary pressures have been a significant factor in the State Bank’s decision.
Earlier, a survey conducted by the foreign news agency Reuters suggested that the IMF might request an increase in Pakistan’s interest rate by one percent, pushing it to 23 percent. This survey had raised concerns about the potential impact on the country’s economy.
Acknowledging the Challenges
Former Prime Minister Shehbaz Sharif acknowledged the challenges posed by the high interest rate. During an event, he stated that while a 22 percent interest rate is detrimental to businesses, it is being enforced out of necessity.
The decision to maintain the current interest rate reflects the State Bank efforts to strike a balance between managing inflation and supporting economic stability in Pakistan during a challenging period.