Pakistan Drops Positive Real Rate Goal on Tighter Fiscal Policy

Pakistan’s central bank has abandoned its goal of moving real interest rates into positive territory after the government tightened its fiscal policy settings, Governor Reza Baqir said.

“We feel that is no longer necessary and real interest rates are appropriate,” Baqir said in an interview to Bloomberg Television’s Rishaad Salamat and Haslinda Amin, referring to the government’s move to broaden its tax base and lower the budget deficit. “Because fiscal policy is helping monetary policy, it allows us to continue the pause and have to do less on real interest rates.”