SBP’s Decision to Maintain Policy Rate at 11.5% Disappoints Business Community: Muhammad Raza.
SBP maintains interest rates at 11.5 percent
Acting President Karachi Chamber of Commerce & Industry (KCCI), Muhammad Raza, while expressing disappointment over the State Bank of Pakistan’s decision to keep the policy rate unchanged at 11.5 percent, stated that the business community had strongly expected a reversal of the previous increase of 100 basis points in view of improving economic indicators and easing global uncertainties.
He said that the cost of doing business in Pakistan was already alarmingly high, making it increasingly difficult for industries and businesses to remain competitive. “Karachi Chamber has consistently maintained that the policy rate should be brought down to single digits to provide meaningful relief to trade and industry, stimulate economic activity and encourage fresh investments”, he added.
Muhammad Raza recalled that during the previous Monetary Policy Committee meeting, the policy rate had been increased by 100 basis points due to concerns arising from inflation expectations and uncertainties prevailing at that time.
Referring to the recent international developments and encouraging signals emerging over the past few days, he noted that prospects of a peace agreement and the gradual easing of geopolitical tensions were contributing towards greater economic stability.
“The expectation of the business community was that the State Bank would, at the very least, withdraw the 100 basis points increase made in the previous policy announcement. Such a move would have sent a positive signal to investors and industrialists and would have supported economic recovery”, he remarked.
Muhammad Raza stressed that persistently high interest rates continue to increase the financial burden on businesses, discourage industrial expansion and impede efforts aimed at enhancing exports and generating employment opportunities. He pointed out that in an environment where businesses are already grappling with elevated energy tariffs, taxation pressures and rising operational costs, maintaining a high policy rate only compounds the challenges confronting the productive sectors of the economy.
He emphasized that sustainable economic growth could not be achieved without providing affordable access to finance. Therefore, monetary policy should be aligned with the broader objective of promoting industrialization, boosting exports and ensuring higher economic growth.
The Acting President KCCI urged the State Bank of Pakistan to review its stance in the upcoming monetary policy and gradually bring the interest rate down to single digits in line with the long-standing demand of the business community. “Lower borrowing costs are essential for restoring business confidence, reviving industrial activity and putting the economy on a stronger and more sustainable growth path”, he added.
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