Karachi: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed significant concern over the State Bank of Pakistan's decision to maintain the key policy interest rate at 10.5%. The FPCCI, led by its President, Atif Ikram Sheikh, has labeled the decision as counterproductive, particularly at a time when Pakistan is seeking industrial revitalization.
According to Federation of Pakistan Chambers of Commerce and Industry, the business community had urged a substantial reduction of 3.5% to bring the policy rate down to 7%. Mr. Sheikh noted that the decision to maintain the status quo is puzzling, given the stable core inflation rate of around 5% and other economic indicators pointing towards a need for growth. He emphasized that the current policy will continue to limit access to finance for industries, which are already struggling with high energy tariffs and borrowing costs.
Mr. Sheikh further warned that the high cost of capital is a major factor behind industrial closures and the inability of Pakistani exporters to compete on a global scale. He called for an immediate review of the monetary policy to align interest rates with the single-digit inflation figures and suggested declaring an "Industrial Emergency" to prevent manufacturing units from shutting down.
Senior Vice President of FPCCI, Saquib Fayyaz Magoon, also criticized the decision, highlighting the gap between the policy rate and the inflation rate. He argued that maintaining the policy rate at double digits is unwarranted and penalizes the private sector, particularly small and medium enterprises, while also hampering export competitiveness. Mr. Magoon remarked that the State Bank of Pakistan missed a critical opportunity to align monetary policy with the government's vision for industrial growth and export facilitation.
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