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The State Bank of Pakistan (SBP), the country's central bank, on April 7 announced a 250 basis points hike in the benchmark interest rates, taking it to 12.25 percent.

The decision was taken by the SBP at an emergency meeting of the monetary policy committee (MPC) called earlier in the day.

"Since the last MPC meeting, the outlook for inflation has deteriorated and risks to external stability have risen," the central bank said in a statement, adding that "heightened domestic political uncertainty" has contributed to a 5 percent depreciation in the Pakistani rupee.

This, in addition to a number of external factors including the Russia-Ukraine conflict and the tightening of fiscal policy by the US has compelled the MPC to revise the key lending rate which stood at 9.75 percent before the meeting, the SBP said.

"The MPC noted that the above developments necessitated a strong and proactive policy response. Accordingly, the MPC decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent. This increases forward-looking real interest rates (defined as the policy rate less expected inflation) to mildly positive territory," the statement said.

The SBP, citing the future markets, suggested that global commodity prices, including oil, are likely to remain elevated for longer and "the Federal Reserve is likely to increase interest rates more quickly" than previously anticipated.

"As a result of these developments, average inflation forecasts have been revised upwards to slightly above 11 percent in FY22 before moderating in FY23," it said, adding that the current account deficit is still expected to be around 4 percent of GDP in FY22.

The MPC was of the view that a "reduction in domestic political uncertainty and prudent fiscal policies" should help ensure that Pakistan’s robust economic recovery from COVID-19 remains sustainable, the central bank noted.

President Joe Biden’s top economic adviser said the administration has warned India against aligning itself with Russia, and that U.S. officials have been “disappointed” with some of New Delhi’s reaction to the Ukraine invasion.

“There are certainly areas where we have been disappointed by both China and India’s decisions, in the context of the invasion,” the director of the White House National Economic Council, Brian Deese, told reporters at a breakfast Wednesday hosted by the Christian Science Monitor.

The U.S. has told India that the consequences of a “more explicit strategic alignment” with Moscow would be “significant and long-term,” he said.

While the U.S., Europe, Australia and Japan have piled economic sanctions onto Russia in response to its war against Ukraine, India has declined and instead has sought to continue imports of Russian oil.

New Delhi’s reaction to the invasion is complicating its relationship with Washington, where India is regarded as an important partner

in countering Chinese influence in Asia.

Deese’s comments come after Deputy National Security Advisor Daleep Singh traveled to India last week for meetings with officials.

“What Daleep did make clear to his counterparts during this visit was that we don’t believe it’s in India’s interest to accelerate or increase imports of Russian energy and other commodities,” Press Secretary Jen Psaki said earlier this week.

India’s Ministry of External Affairs didn’t respond to a message seeking comment sent after normal business hours.

India’s Foreign Minister Subrahmanyam Jaishankar Wednesday again underlined the importance of New Delhi’s ties with Moscow.

Russia is an “important partner in a variety of areas,” the minister told parliament. “Like all other countries, we too are assessing the implications” of Russia’s war in Ukraine and “deciding what is best for our national interest.”

The U.S. and the rest of the Group of Seven nations will continue to collaborate with India and hope that they can align efforts to the greatest extent possible, a U.S. official said in a briefing for reporters Wednesday on new sanctions against Russia. India and the U.S. collaborate extensively on food security and global energy, the official said.

The official asked not to be identified as a condition of the briefing.

In addition to seeking Russian oil, India is the world’s largest buyer of Russian weapons. Indian Prime Minister Narendra Modi has resisted entreaties from the U.S. and Australia to scale back the relationship, insisting that India needs Russian weapons to counter both Pakistan and China and that alternatives are too expensive, according to people familiar with the matter.

Click Here:- Nirmala Sitharaman hails free foodgrain scheme after IMF paper says it kept a lid on extreme poverty during COVID

Sharing the IMF paper on Twitter, the minister said, “The working paper notes that the social safety net given to the poor by way of expansion of the country's food subsidy program absorbed a major chunk of the pandemic shock.”

As reported by Moneycontrol on April 6,  extreme poverty rose to 0.86 percent in 2020 amid the coronavirus pandemic because of the free foodgrain scheme, the paper Pandemic, Poverty, and Inequality: Evidence from India said. Extreme poverty was 0.76 percent in India in 2019.

The World Bank defines extreme poverty as those living on under $1.9 a day in 2011 Purchasing Power Parity terms

"The expansion of India's food subsidy program rather than increasing cash transfers enabled the government to provide for free food as per the average monthly requirement to all those who were entitled to purchase the same from the PDS (Public Distribution System) system," economists Surjit Bhalla, Karan Bhasin and Arvind Virmani said in the paper.

"Subsequently, the doubling of entitlements in 2020 helped maintain extreme poverty at the low 0.8 percent level," the paper added.

The pandemic shock was largely a temporary income shock, the economists said, adding that the fiscal policy interventions were the fiscally-appropriate way to absorb a large part of the shock.