The real interest rates have been artificially kept low in Pakistan over the years despite mega-inflation. In real terms, it hovered around 40 per cent. Is it not a fact that the practice failed to bolster the economy, and, in fact, was primarily responsible for landing the country in the present economic meltdown, forcing the State Bank of Pakistan (SBP) to take corrective measures? Additionally, a higher interest rate is a tool to encourage and increase savings, sustain the worth of national currency, control inflation and stabilise the economy by giving fair treatment to all segments of society. Hence, there is a need to keep the interest rate unchanged.
S. ISRAR ALI
KARACHI
Interest rate
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