Inflation Targeting in Pakistan: Are Traditional Tools Failing or Fueling Economic Crisis? (2010-2024)
Introduction Inflation targeting in Pakistan has been a controversial issue ever since it was formally embraced in the early 2020s. The State Bank of Pakistan (SBP) tried to stabilize prices by committing to an explicit inflation target (5-7%). But high consumer prices and economic instability bring a pertinent question. Are old inflation-targeting instruments effective, or are they aggravating Pakistan’s economic crisis? Between 2010 and 2024, Pakistan experienced repeated shocks. Energy crises, floods, political unrest, and spikes in global commodity prices—that challenged the efficacy of monetary policy. Through an analysis of interest rates, exchange rate policy, and fiscal constraints, this blog considers whether inflation targeting has worked or failed in Pakistan Understanding Inflation Targeting in Pakistan What […]