Pakistan Raises Borrowing Costs In Effort to Combat Inflation

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Pakistan’s central bank has increased interest rates, as expected, citing the need to contain inflation and a devaluation of the rupee, which has shed nearly 6 per cent in two months, the Financial Times reported. The State Bank of Pakistan on Monday raised its key policy rate 150 basis points to 12.25 per cent. The rupee has fallen about 5.9 per cent against the dollar since March. Analysts said the rate rise was made in line with Pakistan’s IMF commitments to secure a $6bn loan to stabilise the country’s weak economy. The consumer price index eased in April to 8.8 per cent from 9.4 per cent a month earlier. The rate is higher than the 3.7 per cent recorded in April 2018. The increase “seems to have largely covered the market’s expectation for now”, said Muhammad Suhail from Karachi’s Topline securities brokerage and investment house. Read more