Under Baqir, inflation was the central bank’s “biggest headache.”

The State Bank of Pakistan (SBP) started a lot of new things when Dr Reza Baqir worked there. These include the Covid response packages, the Roshan Digital Account, the Raast instant and free payment system, and the finalisation of the Digital Banking Policy.

However, one of the main goals of the central bank is to keep prices and inflation in the country stable and under control. This was something that the SBP couldn’t control during Dr Baqir’s time at the SBP (except for the Covid period).

Headline inflation rose to 13.4% in April, the highest level since January 2020, when it was 14.6%, according to the Pakistan Bureau of Statistics. This was due to a steady rise in the prices of both perishable and non-perishable goods.

Month-to-month inflation was 8.3% when Dr. Baqir took office in May of 2019.

Over the next few months, it kept going up. In February 2020, the first case of Covid-19 was found in Pakistan.

It was a godsend for the State Bank when Covid-19 came out.

The SBP started to cut its policy rate the next month. In March 2019, the SBP announced two cuts: a 75bps cut to 12.5pc and a 150bps cut to 11pc.

During the next few months, the central bank kept cutting borrowing costs. In June of that year, the rate was just 7pc. There has been a fifth cut in the interest rate in the last 100 days.

Together, this strong and data-driven monetary policy response should help growth and jobs while keeping inflation expectations in check and keeping financial stability safe, the SBP said at the time.

The SBP then kept the rate the same for more than a year before it raised it again in September 2021.

During this time (March 2019 to September 2021), inflation was mostly low. In January 2021, it even reached 5.7 percent.

A few months ago, the SBP raised its benchmark interest rate by 25 basis points to 7.25 percent. It also said that it could raise rates even more in coming months because the Covid-19 crisis has lessened.

This happened in November, when the policy rate went up to 8.75pc and then 9.75pc the next month. It then kept it the same for three months.

People who work for the State Bank had an emergency meeting on April 7 this year. They raised the policy rate by 250 points to 12.25 percent. It was the biggest hike in a long time, but it was worth it.

The central bank said that the outlook for inflation had worsened and that there were more risks to global stability because of the conflict between Russia and Ukraine, as well as political uncertainty in the United States.

The hike came out of the blue because the next meeting of the monetary policy committee was supposed to be in late April. The bank had said last month that it might meet sooner than expected to keep the economy and prices stable.

The bank said that the March inflation rate was higher than expected, and that political uncertainty, which reached a high point with a standoff between former Prime Minister Imran Khan and the opposition, had made things even worse for the country.


After that huge rise in the policy rate, inflation has kept going up, reaching 13.4% in April, and it’s been going up ever since.

In its next meeting on May 23, the State Bank is expected to raise the policy rate by 100 to 150 points.

However, after all is said and done, it’s still too early to say whether Dr. Baqir did a good job at the bank. In his time in charge, there was a lot of political turmoil at home and around the world, including the Russian invasion of Ukraine, which caused global commodity prices to rise.

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