State Bank of Pakistan has kept the policy (discount) rate unchanged at 14 percent.According to Governor SBP, this is necessary to control stubborn inflation.

This nostrum might be acceptable if there was any evidence that the present strict monetary policy, of which the policy rate is the key, was succeeding in its avowed aim of curbing inflation.Recession-hit economies everywhere in the world, particularly the developed world, while monitoring inflation carefully, are cutting interest rates to encourage investment and economic recovery. For Pakistan, with the dubious distinction of being one of the last destinations of choice for investment, given our terrorism and law and order crises, should take a leaf out of their book and, in recognition of the fact that high interest rates are discouraging investment while failing to curb ‘stubborn’ inflation, revisit the current monetary policy. The need of hour is decisions and policies that not only boost investment but also attract foreign investors.