Pakistan experienced the world’s highest inflation in the fiscal year 2020, forcing policymakers to raise interest rates, the State Bank of Pakistan (SBP).
According to the SBP ‘s April Inflation Monitor, Pakistan has seen the highest inflation not only in relation to the developed economies but also in relation to the emerging ones.
During the fiscal year, the SBP pushed up interest rates to cool down inflationary pressures but high rates proved counter-productive as they increased inflation further, while private borrowing stopped expensive money that hampered industrial growth and services.
January saw high inflation at 14.6 percent for 12 years. The SBP raised the interest rates to 13.25 percent in response to rising prices. Announcement of the rate cut came as inflation slowed down, falling to 8.2 percent in May, much lower than the month’s SBP projections.
Extracted from City42 News