In a positive sign for the Pakistani economy, Bloomberg in its recent report said that December inflation data showed a clear reduction in price pressures, which is restoring confidence in the business and investment circles.
According to the report, food inflation remained limited to 3.24 percent due to better food availability and improvement in the supply chain, while overall inflation came down to 5.6 percent. According to Bloomberg, lower inflation than market estimates not only increased the prospects of relief for the public but also strengthened confidence in policy continuity.
In this context, the State Bank of Pakistan’s 50 basis points reduction in interest rates was described as an important step, which has created hope that financing will be relatively easier for the business community. Bloomberg says that low interest rates can accelerate investment decisions and reduce uncertainty.
According to economists, low inflation improves purchasing power, which can support domestic demand. They say that December data indicate that the foundation for economic stability and better governance is strengthening in the mid-term, provided that policy discipline is maintained.
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