Pakistan’s business community has strongly criticized the State Bank of Pakistan’s (SBP) decision to maintain the policy rate at 10.5 percent, calling it disappointing and counterproductive at a time when industrial revival and export growth are urgently needed.
President Zardari Gives Assent to Seven Bills, Leaves for UAE on Official Visit
Local businessmen said the central bank’s cautious stance was difficult to understand, especially with core inflation stabilised around 5 percent over recent months and key economic indicators signaling the need for growth. They warned that keeping rates unchanged would continue to restrict industry’s access to finance and slow economic recovery.
In contrast, Overseas Investors Chamber of Commerce and Industry (OICCI) Secretary General M. Abdul Aleem said the decision may have surprised many who were expecting a modest cut, but stressed that monetary policy is based on economic fundamentals rather than stakeholder expectations. He added that the economy was performing reasonably well despite ongoing challenges and expressed support for the SBP’s move.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh said the business community had demanded a substantial 350-basis-point reduction to bring the policy rate down to 7 percent to immediately stimulate economic activity. He said industries were facing an existential crisis due to high energy tariffs and borrowing costs, adding that expensive capital was the main reason behind factory closures and weak export competitiveness.
He warned that unless monetary policy is aggressively corrected in the next review to reach single-digit levels, targets for export growth and industrial expansion would remain out of reach.
FPCCI Senior Vice President Saquib Fayyaz Magoon noted that Pakistan’s real interest rate remains significantly higher than regional competitors, despite easing inflation. He said the SBP’s decision would continue to penalise the private sector, limit SME financing and weaken export competitiveness, adding that the central bank had missed an opportunity to align policy with the government’s industrial growth objectives.
Korangi Association of Trade and Industry (KATI) President Muhammad Ikram Rajput said there was sufficient room for at least a one-percentage-point cut, given declining exports and lower inflation. He questioned the SBP’s growth forecast of 3.75 to 4.75 percent, calling it inconsistent with ground realities, and suggested the decision appeared more aligned with IMF expectations than domestic needs.
SITE Association of Industry President Ahmed Azeem Alvi said rising imports and falling exports showed that high interest rates were stalling economic progress. He urged the SBP to reduce the policy rate by at least 100 to 150 basis points, saying timely action could support businesses, boost exports and strengthen overall growth.
Pakistan Chemical and Dyes Merchants Association Chairman Salim Valimuhammad also warned that maintaining high rates would further strain businesses and delay economic recovery.
