KARACHI: Historic jump by State Bank of Pakistan (SBP), jacking up key policy rate by 100 basis points to a record high of 21% with a view to controlling inflation is not acceptable to the business community, said Ateeq ur Rahman, economic & financial analyst.
He said inflation is expected to stay at elevated level. He said as we are a cash economy not a mortgage economy; therefore, this huge rise in policy rate will not reduce inflation, especially the food inflation.
He added that the prices to remain higher due to demand and supply gap of essential items, exchange rate depreciation and upward adjustment of prices of petrol, diesel, gas and electricity.
He said economically speaking in our country, supply chain has severely been affected due to closure of various industries owing to government restrictions of opening LCs and this massive rise in policy rate will effect tremendously the logistics and supply chain, again.
Further in such a broken economy, the wealth creation is eminent; hence, producing wealth distribution which is not possible without working capital. The working capital is only possible where the access to finance and cost of Credit is easy. In such cases the Working Capital is not only difficult but impossible, also.
Copyright Business Recorder, 2023
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