Given that Karachi Inter-Bank Offered Rate has shot up to a 13-year high, and cut-off yields on treasury bills are also exploding, it’s only a matter of days, or weeks at the most, before the state bank raises interest rates once again. With inflation currently at 12.7 per cent and the interest rate at 12.25 per cent, the real interest rate is still negative. And with the inevitable rise in petrol and electricity prices also coming into play soon enough, there’s clearly going to be yet another uncomfortable uptick in inflation, which will, no doubt, force the central bank to become even more hawkish. That’s going to rub businesses just the wrong way, especially since this close to the budget they must begin planning for the next fiscal as well. Already, a number of business forums have called on the State Bank of Pakistan to roll back the hefty increase of last time. To know that the exact opposite might happen very soon could well drive them into a frenzy. Yet it is an unfortunate necessity because the only thing really growing in this economy at this moment is the fortnightly inflation reading. All this explains why most international outlets like the world bank and the IMF have cut Pakistan’s growth target for the immediate term. Not only will we be perhaps the slowest growing country in South Asia this year and also possibly the next, but also definitely the most expensive. That means less growth, fewer jobs and higher prices all at the same time. Those towards the bottom of the food chain can also forget about any subsidised help from the government; especially if the IMF bailout program is to be salvaged. This makes for a very tricky situation for the new government. Pakistan Democratic Movement was able to drive the no-confidence motion home, precisely on the back of economic problems, just like these, which the PTI government could not solve. Yet now that the shoe is on the other foot, it remains to be seen if PM Shahbaz Sharif’s government does anything differently. For now, just about the only thing about the economy that can be said with any certainty is that interest rates are all set to rise even more. *