State Bank Acting Governor Dr. Murtaza Syed’s statement that monetary policy to bring down inflation will not be used as a tool to create an economic recession and that positive interest rates can be achieved in the long run is a step in the right direction. This is an important step.
The media is constantly reporting that, according to the State Bank, the inflation rate will remain at up to 20% in the current financial year. can cause
Commodity prices are on the rise in the global market, and there are signs of another global economic crisis in the current financial year. Like other emerging economies, Pakistan is also facing rising inflation. Due to the economic recession, poverty and unemployment will also increase.
Following the amendment to the SBP Act 2022, the main target of SBP is inflation. The main ways to control inflation and reach this fundamental goal are through the current monetary and exchange rate systems.
The State Bank has been changing the inflation rate forecast. Failure to control and manage inflation leads to market volatility, and the market charges higher premiums to borrowers. We must acknowledge the fact that fiscal measures alone cannot solve all economic challenges.
These steps can help with fiscal and structural reforms, which are the main ways to fix problems in the economy.