Sunday, March 28, 2010
Pakistan Keeps Benchmark Rate Unchanged for Second Time in 2010
I just thought it would be interesting to see that while many countries have been keeping their interest rates low, ranging from 0 to 3 percentage, Pakistan's central bank still maintains a particularly high discount rate of 12.5 percent. Pakistan wants to reduce the borrowing costs to spur the recovery of consumer and investment demand, yet the country cannot risk fueling already high inflation. Tariffs on essential sources of energy (gas and electricity), coupled with the food shortage and political instability, have significantly driven the consumer prices upward.
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It is interesting to see another strategy dealing with interest rates during a time of recovery.
ReplyDeleteAs a Pakistani myself, I know the power shortage which the country faces. Even the biggest industrial city, Karachi where I'm from, faces at least a couple of hours of power shortage everyday. I think the central bank needs to decrease the interest rates to encourage investment so that new power stations can be build that can generate electricity. This power shortage is costing the country a heavy sum of money and the economy is not growing at the optimum level.
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