Three Percentage Point Central Bank Rate Hike in Pakistan
March 2, 2023
Officials at the State Bank of Pakistan boosted the policy interest rate sharply from 17% to 20% today, bringing the rate level to a 27-year high. This was the second increase of 2023 following a 100-basis point move in January. From a pandemic low of 7.0%, the rate was lifted by 275 basis points in the final four months of 2021 and by a further 625 basis points last year, but today’s move was the sharpest of the current tightening cycle. CPI inflation has accelerated sharply lately to 31.5% last month, driven by the government’s higher goods and services tax rate and by a depreciating rupee, which fell 6.3% against the dollar today and by 36% compared to its value a year ago. A statement explaining today’s decision revised the near-term path of projected inflation sharply higher from a forecast made three months ago.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: State Bank of Pakistan
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