Pakistan Raises Interest Rate by 100 Basis Points Amid Inflation Fears
Pakistan Central Bank Hikes Policy Rate By 100 Bps As West Asia War Fuels Inflation
Ndtv
Image: Ndtv
The State Bank of Pakistan increased its policy rate by 100 basis points to 11.50% due to inflation concerns linked to rising oil prices from the ongoing conflict in West Asia. This marks the first rate hike in nearly three years, as inflation is projected to reach 10% by the end of April.
- 01The policy rate was raised to 11.50% by the State Bank of Pakistan.
- 02This is the first rate hike in almost three years.
- 03Consumer price inflation in Pakistan reached 7.3% in March.
- 04The hike is a response to rising oil prices due to the US-Israel conflict with Iran.
- 05The Pakistan Stock Exchange reacted negatively, with a significant drop in the KES 100 index.
Advertisement
In-Article Ad
On Monday, the State Bank of Pakistan (SBP) raised its policy rate by 100 basis points to 11.50%, marking the first increase in nearly three years. This decision was driven by concerns over inflation, particularly due to rising oil prices linked to the ongoing conflict in West Asia, including the US-Israel war on Iran. The SBP's Monetary Policy Committee noted that consumer price inflation had already surged to 7.3% in March, surpassing the target range of 5% to 7%, with projections suggesting it could escalate to 10% by the end of April. In response to this announcement, the Pakistan Stock Exchange (PSX) experienced a decline, with the KES 100 index dropping 1,174.69 points to close at 169,497. Prior to this hike, the SBP had reduced rates by a total of 1,150 basis points since June 2024, from a peak of 22% to 10.5%.
Advertisement
In-Article Ad
The interest rate hike will likely increase borrowing costs for consumers and businesses, potentially slowing economic growth.
Advertisement
In-Article Ad
Reader Poll
Do you think the interest rate hike will effectively control inflation in Pakistan?
Connecting to poll...
More about State Bank of Pakistan
Read the original article
Visit the source for the complete story.