While narrating stories from Afghanistan, the writer Syed Mujtaba Ali once wrote, ‘Quinine will cure the fever; but who will cure the quinine?’ In trying to reduce the high rate of inflation in the country, high interest rates were indeed a necessary ‘medicine’; but now, how to alleviate the pain caused by high interest rates has become a cause for concern. Antibiotics cure disease, but excessive use of antibiotics also weakens a patient’s immune system.

The persistent coexistence of high interest rates and high inflation over the past one and a half years has trapped the country’s economy in a complex bind. Currently, high interest rates themselves are contributing to stubborn inflation. Excessive interest raises the cost of capital and production, ultimately fueling cost-push inflation.

Does this mean the science of monetary policy has failed? Not at all. Does it mean that lowering interest rates now will weaken inflation? That is also not true. Then should we accept high inflation as our fate? That is even less true. After the Chernobyl nuclear disaster, scientists said it was caused by six ‘blunders.’ Multiple blunders have also contributed to the current sharp inflation. The first mistake was the failure to administer the ‘medicine’ in time. Just as giving medicine too late to a patient burned by fire renders antibiotics ineffective, failing to raise interest rates when needed rendered them ineffective in 2022–23.