Skip to content
Search

Latest Stories

Pakistan keeps high rate to cool inflation

Pakistan's economy has been beset by high price pressures, with monthly consumer price indexbased inflation remaining above 20 per cent since June 2022

Pakistan keeps high rate to cool inflation

PAKISTAN’S central bank kept its key rate unchanged at a record 22 per cent on Tuesday (12) as it waits for the effects of previous hikes to filter through the economy and further tame inflation.

The State Bank of Pakistan’s monetary policy committee said an increase in gas prices last month could affect the inflation outlook. “The decision does take into account the impact of the recent hike in gas prices ... the committee viewed that this may have implications for the inflation outlook, albeit in the presence of some offsetting developments,” the State Bank of Pakistan (SBP) said.


The rate was raised to 22 per cent in an off-cycle meeting in June as a last-gasp attempt to secure a $3 billion (£2.39bn) bailout from the International Monetary Fund (IMF) as part of a reforms programme aimed at bringing stability to the troubled $350bn (£279bn) economy.

Pakistan’s economy has been beset by high price pressures, with monthly consumer price indexbased inflation remaining above 20 per cent since June 2022, and hitting a high of 38 per cent in May this year.

The bank and the IMF both said they expect inflation to ease in the current financial year ending in June 2024, but inflation remained at 29.2 per cent in November after energy prices were hiked to meet reform targets.

“Barring further sizable increase in administered prices, the MPC continues to expect that headline inflation will decline significantly in the second half of FY24,” the bank said.

High borrowing costs have slowed economic growth, which stands at about two per cent, but investors say they have already priced in a peak in interest rates and the expected successful completion of the IMF programme has buoyed stock markets and the currency.

Ahead of the IMF bailout in July, Pakistan had to commit to a slew of measures demanded by the IMF, including revising its budget, demonstrating promises of foreign funding and increasing electricity and natural gas prices. The IMF has released $1.2 billion (£960 million) in funds. Under a staff level agreement reached last month the fund is set to release another $700m (£557m) once approved by its board on January 11.

The country’s foreign reserves have improved, growing to around $7bn (£5.57bn) – enough to cover 1.4 months’ worth of imports and up from $4.4bn (3.5bn) in July.

“The committee expected the successful completion of the first review of the ongoing IMF program is likely to improve financial inflows as well as the FX reserves position,” the central bank said on Tuesday.

The country is scheduled to hold elections in February and most electoral front-runners have said they will look to reignite economic growth.

Pakistan’s benchmark index KSE100 crossed a psychological barrier of 66,000 points to trade at an all-time high, gaining 4,532 points or 7.3 per cent in the week ending December 8, the highest ever weekly return in terms of points. (Reuters)

More For You

Baiju Bhatt

At 40, Bhatt is the only person of Indian origin in this group, which includes figures such as Meta’s Mark Zuckerberg. (Photo: Getty Images)

Baiju Bhatt named among youngest billionaires in US by Forbes

INDIAN-AMERICAN entrepreneur Baiju Bhatt, co-founder of the commission-free trading platform Robinhood, has been named among the 10 youngest billionaires in the United States in the 2025 Forbes 400 list.

At 40, Bhatt is the only person of Indian origin in this group, which includes figures such as Meta’s Mark Zuckerberg. Forbes estimates his net worth at around USD 6–7 billion (£4.4–5.1 billion), primarily from his roughly 6 per cent ownership in Robinhood.

Keep ReadingShow less
UK business district
The Canary Wharf business district including global financial institutions in London. (Photo: Getty Images)
Getty Images

Economy shows no growth in July amid political turbulence

UK's ECONOMY showed no growth in July, according to official data released on Friday, adding to a difficult week for prime minister Keir Starmer’s government.

The Office for National Statistics (ONS) said gross domestic product was flat in July, following a 0.4 per cent rise in June.

Keep ReadingShow less
India’s IT sector

India’s $283 billion IT industry, which contributes more than 7 per cent to the country’s GDP, has for over three decades provided services to major clients including Apple, American Express, Cisco, Citigroup, FedEx and Home Depot.

iStock

India’s IT sector faces uncertainty as US proposes 25 per cent outsourcing tax

INDIA’s IT sector is facing uncertainty as US lawmakers consider a 25 per cent tax on companies using foreign outsourcing services.

Analysts and lawyers said the proposal has led to customers delaying or re-negotiating contracts, raising concerns in India, the world’s largest outsourcing hub.

Keep ReadingShow less
Rachel Reeves

'Our economy isn't broken, but it does feel stuck,' Reeves said, speaking alongside the release of a finance ministry report on business property taxation, known as rates.

Getty Images

Reeves signals possible changes to business property taxes ahead of budget

CHANCELLOR Rachel Reeves said on Thursday she is considering changes to business property taxes to support small firms looking to expand, as part of her plans to boost growth.

Reeves’ comments come ahead of her annual budget on November 26, at a time when concerns about possible tax rises and inflation are weighing on businesses and households.

Keep ReadingShow less
Rachel Reeves

Reeves pledged to keep a tight hold on spending to reduce inflation and borrowing costs amid concerns over Britain’s fiscal outlook.

Getty Images

Reeves urges ministers to back Bank of England on inflation

CHANCELLOR Rachel Reeves has said the government must support the Bank of England in bringing down inflation while also focusing on growth, ahead of a budget later this year that is expected to include tax rises.

Last week, Reeves said the economy was not “broken” as she announced November 26 as the date for her annual budget.

Keep ReadingShow less