KARACHI: Pakistan inflation rate pressures eased last month, bringing brief relief to officials after the central bank raised interest rates.
The State Bank of Pakistan increased its main policy rate by 50 basis points to 12.0% on October 26. SBP Governor Jameel Ahmad announced the decision to control rising prices.
Consumer price growth stayed above the bank’s target range of 5% to 7% for seven straight months. Higher global crude oil prices contributed to the rate decision.
Middle East conflict pushed oil above $100 per barrel. Local wheat shortages also drove up domestic food costs over recent months.
Read: SBP Raises Policy Rate to 12% from 11.5% on Energy Risks
The rate increase will raise borrowing costs for auto loans, home loans, and business credit lines. Rating agencies Moody’s and S&P recently upgraded the country’s credit rating.
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However, analysts warn that high energy costs and slow growth still present risks. Pakistan’s consumer price growth slowed last month after the central bank raised its main interest rate to 12.0%.
(With input from Bloomberg and Arab News)
