Pakistan seeks to skirt crisis with biggest rate hike since 1996

Pakistan’s central bank raised interest rates by 250 basis points (bps) following an emergency meeting, as escalating political chaos at home and higher global oil prices threaten to spill over into a fullblown economic crisis.

The key rate now stands at 12.25 per cent, State Bank of Pakistan said in a statement on Thursday. This makes the real rate “mildly positive” and will help preserve external and price stability, it said.

“Heightened domestic political uncertainty” contributed to a 5 per cent depreciation in the rupee, triggered a surge in local bond yields as well as Pakistan’s Eurobond yields and CDS spreads,” the