FPCCI Denounces Contractionary Monetary Policy As SBP Holds Rate At 11.5%.
✧ GENERATE BRIEFING +
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI), led by President Atif Ikram Sheikh, has strongly denounced the State Bank of Pakistan’s decision to maintain the benchmark policy rate at 11.5%. Characterizing the status quo as a "highly contractionary and counterproductive" move, the apex trade body warned that keeping borrowing costs at restrictive levels severely stifles industrial revival, discourages private-sector credit off-take, and deepens an existential crisis for small and medium enterprises (SMEs) struggling with operational liquidity. The official FPCCI press release underscores that the business community's appeals for single-digit interest rates were ignored, leaving trade and industry with no breathing space amidst skyrocketing energy tariffs, volatile petroleum prices, and an 18.1% year-on-year surge in the trade deficit for July–August 2026. FPCCI stressed that the prohibitive cost of capital is rendering Pakistani manufacturers globally uncompetitive—causing exporters to rapidly lose hard-earned market share to regional competitors benefiting from single-digit rates—and urged the central bank to urgently pivot toward pro-growth monetary interventions.
Mr. Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has expressed his disappointment over the State Bank of Pakistan’s decision to maintain the status quo on the key policy rate to keep it unchanged at 11.5% – whereas, trade and industry are in dire need of some breathing space in the wake of current stagnation-prone economic environs.
The apex trade body has termed the decision as highly contractionary and counterproductive – warning that holding the benchmark interest rate at an oppressive level will continue to severely stifle economic activity and undermine industrial revival efforts across the country. Monetary policy was the only but a potent tool left with the authorities at the moment to provide some facilitation; but, it remained unutilized, he added.
Mr. Atif Ikram Sheikh stated that the business community had demanded a reduction in the policy rate to single-digits to help bring down the exorbitant cost of doing business. He elaborated that the central bank’s overly cautious approach directly contradicts current economic realities – and denies much-needed support to trade & industry as the trade deficit has climbed by 18.1% in July-August 2026 on a year-on-year basis.
FPCCI Chief maintained that the industry is currently battling an existential crisis driven by elevated energy tariffs, burgeoning petroleum prices, geoeconomic uncertainty, and sky-high financing costs, directly resulting in stagnating industrialization across the country.
Mr. Atif Ikram Sheikh explained that the manufacturing sectors are suffering from severely stunted growth because businesses cannot secure the capital required to operate. This stagnation is severely compounded by extreme difficulty in access to finance, he added.
FPCCI President stressed that with the cost of borrowing remaining prohibitively high, private-sector credit off-take will continue to plummet – crowding out small and medium enterprises (SMEs) as well as large-scale manufacturers from the formal credit market and leaving them desperate for operational liquidity.
Mr. Atif Ikram Sheikh warned that this sustained high cost of capital is the primary catalyst for declining exports, as manufacturers are entirely unable to keep production costs competitive globally.
Exporters are actively losing their hard-earned global market share to regional competitors who benefit from highly accessible, single-digit interest rates. The exorbitant cost of export refinancing in Pakistan makes local goods uncompetitive, resulting in a loss of export orders and declining foreign exchange earnings, he added.
Mr. Atif Ikram Sheikh highlighted that national targets for export growth and economic recovery will remain elusive with prevailing monetary and fiscal policies. He urged the State Bank of Pakistan to urgently reconsider its rigid stance and adopt immediate measures that genuinely support business continuity.
