Inflation remained central bank's 'biggest headache' under Baqir.

KARACHI -- During his stint at the central bank, Dr Reza Baqir oversaw several new initiatives, including State Bank of Pakistan (SBP's) Covid response packages; Roshan Digital Account to connect overseas Pakistanis with local banks; Raast instant and free payment system, and finalising the Digital Banking Policy to pave the way for digital banks.

However, a key goal of the central bank is to achieve and maintain domestic price stability and inflation - something that remained out of SBP's control during Dr Baqir's tenure (except for the Covid period).

Headline inflation jumped to 13.4 per cent in April - the highest level since January 2020 when it stood at 14.6pc - on the back of a persistent increase in prices of perishable and non-perishable products, according to the Pakistan Bureau of Statistics.

Monthly inflation was 8.3pc when Dr Baqir came to office in May 2019.

It then saw a steady increase over the next several months and hit 12.4pc in February 2020, when the first case of Covid-19 case was reported in Pakistan.

As far as inflation is concerned, Covid-19 came as a godsend for the State Bank.

The SBP started to slash its policy rate from the next month, announcing two reductions in March 2019 - first, a 75bps cut to 12.5pc and then another 150bps drop to 11pc.

The central bank continued to slash borrowing costs over the next few months until they dropped to 7pc in June that year. It was the fifth time the central bank reduced the interest rate in the last 100 days.

'Together, this strong and data-driven monetary policy response should support growth and employment while keeping inflation expectations anchored and maintaining financial stability,' the SBP said in its monetary policy statement at the time.

The SBP then left the rate unchanged for more than a year before it increased it in September 2021.

Inflation largely remained low during this period (March 2019 to September 2021), and even reached 5.7pc in January 2021.

In September, the SBP raised its benchmark interest rate by 25 basis points to 7.25pc and signalled that it could increase rates further in the coming...