Pakistan has increased its interest rate to 21% to reduce its spiralling inflation. Due to several circumstances, including a significant trade deficit, a high level of public debt, and a depreciated currency, the nation has been experiencing a severe economic crisis.
The decision to increase interest rates is made to lower the amount of money in circulation and contain inflation. The shift is anticipated to raise borrowing costs, making credit more expensive for individuals and businesses. Less money might be spent, which would impact the economy.
However, the decision to increase the interest rate is associated with dangers. The nation’s debt load could rise; as a result, placing strain on a budget of the government. It might also harm companies and customers who are already having a hard time making ends meet.
