Unexpected tightening in Pakistan

Pakistan's central bank has unexpectedly raised its benchmark interest rate to its highest level in more than five years after inflation exceeded its target.

The State Bank of Pakistan increased its discount rate for commercial lenders by a half point to 10%. Analysts had expected rates to remain on hold.

Inflation has averaged 7.7% in the year that ended June 30, which is above the central bank's 6.5% target. The cost of food jumped 9.7% in June due to adverse weather conditions.

The governor

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