The policy rate set by the Central Bank affects how much the government pays on its debt. Lowering the policy rate can create more money for helping people during the Covid-19 crisis. Some central banks, like the State Bank of Pakistan, worry that lowering the rate will cause inflation to rise. But studies show that high policy rates actually lead to higher inflation. By reducing the policy rate, more money can be available for helping people and businesses affected by the pandemic without causing inflation to spike.