The State Bank of Pakistan raised its benchmark policy rate by 150bps to 10 percent on 30th November, citing rising inflation and large twin deficits. It was the fifth rate hike this year, bringing borrowing costs to the highest in six years. In October, inflation jumped to 7 percent from 5.12 percent in September. Policymakers forecast inflation rate for the FY19 of 6.5-7.5 percent, higher than the annual target of 6 percent and GDP growth slightly above 4 percent. Interest Rate in Pakistan averaged 11.17 percent from 1992 until 2018, reaching an all time high of 19.50 percent in October of 1996 and a record low of 5.75 percent in May of 2016.
Interest Rate in Pakistan is expected to be 10.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Pakistan to stand at 10.25 in 12 months time. In the long-term, the Pakistan Interest Rate is projected to trend around 11.00 percent in 2020, according to our econometric models.