The Karachi Chamber of Commerce and Industry (KCCI) today strongly urged the State Bank of Pakistan (SBP) to cut its policy rate by at least 100 basis points, citing moderated inflation and the severe burden that high borrowing costs are placing on the national economy.
In a joint statement, Chairman of the Businessmen Group (BMG), Zubair Motiwala, and KCCI President, Muhammad Rehan Hanif, called for the interest rate to be brought down to 10 percent, arguing that significant economic space for monetary easing now exists.
The appeal comes as the SBP’s policy rate has remained fixed at 11 percent for the fourth consecutive time, following the last monetary policy announcement on October 27, 2025. The business leaders contended that maintaining such a high rate for an extended period is unsustainable and detrimental to economic activity.
They highlighted that Pakistan”s external sector has shown signs of improvement, buoyed by program inflows and a gradual strengthening of foreign exchange reserves. These positive developments, they argued, have collectively eased pressure on the macroeconomic framework, making the historically elevated policy rate unjustifiable.
According to the chamber officials, the current financing costs are stifling investment and hampering economic revival. Industries, small and medium-sized enterprises (SMEs), exporters, and investors are all facing exceptionally high financial burdens that prevent growth and employment generation.
A reduction of at least one percent, they remarked, would provide the necessary stimulus to revive investment sentiment. Motiwala and Hanif stated that lower borrowing costs would ease the financial strain on businesses, improve their working capital, and encourage them to move forward with expansion and hiring plans that have been repeatedly delayed.
The business leaders also believe a timely rate cut would help redirect bank lending toward productive sectors of the economy, rather than its current disproportionate concentration in government securities, thereby supporting real economic growth.
While acknowledging the central bank”s responsibility to monitor inflationary pressures, they stressed that prevailing economic indicators suggest a carefully calibrated rate reduction would not compromise price stability. Instead, they believe it would contribute meaningfully to rebuilding business confidence and accelerating the recovery process.
The statement further underscored that Pakistan’s 11 percent policy rate is one of the highest in the region, placing local producers and exporters at a significant cost disadvantage. They compared it with key competitors, noting India’s repo rate is at 5.25 percent, Sri Lanka’s at 7.75 percent, Vietnam”s at 4.5 percent, and Nepal”s also at 4.5 percent, while Bangladesh”s stands at 10 percent.
Concluding their appeal, the KCCI leaders said the business community is eagerly awaiting a positive signal from the SBP. They expressed hope that a 100-basis-point reduction at the upcoming Monetary Policy Committee meeting on December 15 would demonstrate responsiveness to economic realities and provide essential relief to the country”s productive sectors.