Lower rates growth in pakistan

The central bank last month cut borrowing costs for the first time since 2002, reducing its benchmark rate to 14 percent from 15 percent. Lower rates may help prop up growth in Pakistan, which is struggling to deal with Islamic insurgents and a crumbling economy.
“The inflation trend shows that the central bank’s rate- cut decision was timely,” said Asif Qureshi, head of research at Invisor Securities Ltd. in Karachi. “Easing inflation will help the country regain some economic stability amid very difficult conditions.”
International donors meeting in Tokyo last month pledged more than $5 billion to help Pakistan shore up its ailing finances and fight terrorism. Prime Minister Yousuf Raza Gilani on May 7 vowed to eliminate Taliban gunmen who have advanced to within 100 kilometers (60 miles) of the capital Islamabad.
State Bank of Pakistan predicts inflation may ease to 11 percent by June. Former Governor Shamshad Akhtar last year increased the central bank’s key rate to the highest in more than a decade to slow inflation and help shore up the nation’s foreign-exchange reserves.
The country was forced to turn to the International Monetary Fund for a $7.6 billion rescue package in November after its reserves shrank 75 percent in a year to $3.45 billion.
Higher borrowing costs have dented growth in the economy, which is predicted by the government to expand 2.5 percent in the year to June 30, down from 5.8 percent last year.


Source : www.bloomberg.com/apps/news?pid=20601091&sid=aravzxeXRh4Y&refer=india