If the State Bank of Pakistan delivered any surprise on Thursday when the Monetary Policy Committee raised the benchmark interest rate by 125 basis points to 15 per cent, it was that it didn’t go for a 150bps jump as segments of the market had feared. Short of that, it still went for a big hike, cited runaway inflation as well as the strong global tilt towards monetary tightening, and various chambers of commerce and industry duly went up in arms and warned of business, production and trade inefficiency. However, acting governor Dr Murtaza Syed did make a couple of very valid points. One, it’s true that central banks around the world are in a hawkish frenzy because of levels of inflation not seen in many decades in some countries. But it’s also true that a lot of them are already worrying about pushing their economies into a recession by tightening too much too quickly. Unfortunately, because of the long lags involved in policy decisions that show results, such things cannot generally be understood till it’s too late. So Pakistan, too, will have to wait and see how much this drive to raise rates harms the growth cycle. And two, the biggest problem right now is food and energy inflation, and there’s not much the SBP can do about either. It is the government that will have to enact necessary but painful reforms, at the end of the day, that will now get us out of this particular mess. And since no administration has yet displayed the willingness to initiate Agri or energy reforms — which will induce a lot of trauma before eventually showing sustainable results — because they don’t sell well on campaign trails, it’s difficult to see how the future is going to be much different than the past. SBP merely did what was largely expected of it. That’s why the market, and trade bodies with very valid concerns, had already priced it in. *