End of free money era: can Pakistan survive?

The period of ultra-low interest rates, often dubbed the “free money era”, has officially concluded. This shift in global monetary policy signifies a critical turning point for economies worldwide, especially Pakistan. The free money era was characterised by a time when major central banks, such as the US Federal Reserve (Fed), the European Central Bank (ECB), the Bank of England (BoE), and the Bank of Japan (BoJ), maintained ultra-low or even negative interest rates to deal with the economic fallout from the 2008 financial crisis. This created an environment where borrowing was cheaper than ever before, prompting businesses to expand their operations and consumers to increase spending on goods and services. This boost in spending and investment drove up consumption, fuelling economic activity.