I am often asked this question that if the claims of the government on inflation are indeed correct, then why aren’t the prices coming down? Well, a simple answer is that it is the inflation that is being tapered down and not the price points, meaning the escalation in prices still remains, albeit at a slowing rate. The trouble is that with the Pakistani public now exposed to hyper-inflation for such a long duration and to a double whammy of its wealth erosion owing to some mindless PKR devaluations, this diminishing rate of national inflation is simply not good enough for them.

Somewhere along the line, it is necessary for the government to hit disinflation, if it is to really win over the people on count of improving their disposable financial income. In the run-up to the latest review of the country’s monetary policy, the State Bank of Pakistan (SBP), faced a dilemma: Should it retain its focus on containing inflation, or recalibrate its priorities and do its bit to revive growth by reducing the interest rate? Eventually, SBP leaned towards the latter, thereby signalling that it was cognizant of the growing pressures on growth. In contrast, our neighbour India, opted for the former where it’s central bank RBI (Reserve Bank of India) opted not to reduce the interest rate by instead opting to inject liquidity into the system to support growth: While the RBI did not blink on interest rates - though it did not rule it........

© The Nation