SBP hikes to 12.25% as inflationary risks grow
Government has been borrowing heavily from central bank and rupee has weakened
The State Bank of Pakistan (SBP) has hiked its main rate sharply, citing higher inflation, a falling currency and the high level of government deficit as reasons.
The monetary policy committee chose to raise the policy rate by 150 basis points, to 12.25%, the central bank said in a statement today (May 20). Consumer price inflation was 9.4% in March, up from 3.2% a year earlier.
Part of the problem is the high fiscal deficit, which the SBP expects to grow over the coming year, as revenues have
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