That rising inflation has become a global challenge is a fact that has found its best expression from the Bank of England’s decision that it took on Thursday to raise interest rates to 0.5% although nearly half its policymakers wanted a bigger increase to contain rampant price pressures which, according to media reports, the British central bank warned would push inflation above 7%.

Rising global commodity prices have in fact posed a more profound challenge to the developing countries such as Pakistan’s. Not only is the global price hike driving country’s current account deficit, it is also pushing inflation up. It is quite likely that the central bank (State Bank of Pakistan) with new-found independence and autonomy will employ all of its tools to improve the situation as early as possible. Its recent decision of maintaining interest rates appears to be not yielding desired results.

Nawab Mirza (Karachi)

Copyright Business Recorder, 2022