KARACHI: After a huge jump in policy rates on Friday by the Monetary Policy Committee of the central bank that raised 150 basis points to now 8.75 per cent, as a measure to offset the inflationary effects in the economy, the financial experts and economists have shared their reservations, ARY News reported.
We expected the rate would be hiked to 8.5 pc at max but what they have decided is little over that, said AKD Group chairman and Pakistani tycoon Aqeel Karim Dedhi while talking to ARY News.
It must be that the government was compelled to do so to address the reservations by the International Monetary Fund (IMF) team ahead of the release of the rest of the bailout package, said Dedhi.
SBP announces to raise interest rate by 150 bps to 8.75pc
The State Bank of Pakistan announced today the new raised interest rates, by 150 basis points, which now stands at 8.75 per cent for the next two months. It had convened the meeting earlier than previously scheduled and announced the rates amid unforeseen circumstances, it said.
Sharing the details of the monetary policy committee (MPC) from its Twitter handle, the SBP said that the rise in interest rate reflects their view that since the last meeting, risks related to inflation and the balance of payments have increased while the outlook for growth has continued to improve.
Amid ‘unforeseen developments’, SBP mulls interest rate today
Dedhi said we’d appreciate if the government kept these rates in the next MPC meeting as well and didn’t further tighten the policy.
Chairman of Arif Habib Securities Arif Habib said this would fare badly on the economy. An immediate surge in policy rates and so huge will have adverse effects on the economy, Habib said. It discourages investment and business prospects, he said.
On the other hand, reverberating the same narrative, ex finance minister Zubair Motiwala also remained critical of the hike. The interest rate surge is not proportional to the circumstances, he said.
If industrial production is made more pricey, it will not hold lucrative for the economy, he said.
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