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Central Banks

Pakistan Surprises With Steep Rate Hike to Stop Inflation Spiral

  • Central bank raises inflation forecast to 21%-23% for 2023
  • Nation to pay $1 billion Sukuk bond on Dec. 2, says governor
Downtown Karachi.

Downtown Karachi.

Photographer: Asim Hafeez/Bloomberg
Updated on

Pakistan unexpectedly raised its benchmark interest rate by a full percentage point to prevent stronger-than-anticipated inflation from spiraling out of control.

State Bank of Pakistan increased the target rate to 16% on Friday, a move expected by just one of 44 economists in a Bloomberg survey while the rest had predicted no change. The authority also raised its annual inflation forecast to 21%-23% from about 18%-20%.