There has been a cumulative 2 per cent cut in the policy-rate since Shahid Kardar left.
CHANTILLY, VA, US: The editorial titled “A gamble with the economy” published on October 11, was a balanced editorial and it is hoped that things will work out for the better in Pakistan. There has been a cumulative 2 per cent cut in the policy-rate since Shahid Kardar left. It sounds like someone would like his job by posing to be more accommodative than Kardar was. Time will tell who was right. I think it is a risky move to cut interest rates and a professional economist is yet to endorse it. The cost of capital is only one determinant of investment as countless econometric models attest. Investment will not rise unless there are other supporting factors.
Even if we do not see an up-trend in inflation, bringing it down will be delayed, thus, prolonging its duration in double-digits. Both are just as cruel when it comes to the fixed income groups and the poor who have no way to protect themselves.
Meekal Ahmed
Published in The Express Tribune, October 12th, 2011.
