Pakistan central bank raises key interest rate by 100 Bps to 21%

Pakistan’s central bank increased its benchmark interest rate to a record 21 percent on Tuesday. As the cash-strapped nation sought to reduce severe food inflation & keep the trust of foreign creditors

Consumer inflation has increased as a result of global reasons in addition to Pakistan’s weaker currency, rising energy prices, & Ramadan-related rises in food prices.

After falling more than 1 percent during the day. The Pakistan rupee depreciated to its lowest level ever, as it closed at 287.29 against the dollar. From the beginning of the year,

The central bank increased its benchmark rate by 300 bps to 20 percent at the beginning of March, going above and beyond market forecasts.

The only assistance Pakistan has received thus far in its efforts to avoid a potential foreign debt default has been from China, a longtime ally, through a refinancing of 1.8 billion dollar and a rollover of 2 billion dollar in March.