Updated on
Summary The State Bank had cut the interest rate by half a percentage in November 2008.
In November 2008 interest rate was 15 percent. After March 2009 there started the cuts in interest rate, and continued until 2010. There was a decrease of 250 bases points in discount rates. In November the interest rate was fixed at 14 percent.The interesting aspect is that whenever discount rate was at a higher stage, the inflation also increased along with it. For instance in November 2008 the inflation increased by 24.5 percent. In the next one and half a year there was a decrease of 250 percent in the interest rate while inflation decreased by 14 percent. Experts believe the monitory policy has failed to arrest the inflation. It is imperative to further cut the interest rate.
