KARACHI: Saquib Fayyaz Magoon, Chairman of the Businessmen Panel Progressive (BMPP) and Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has expressed disappointment over the Monetary Policy Committee's decision to maintain the current policy rate. This decision, according to Magoon, has diverged from the expectations of both the FPCCI and the broader business community.
According to Federation of Pakistan Chambers of Commerce and Industry, Magoon stated that the declining inflation rate, currently at 5.6 percent, presented an opportunity for the State Bank to reduce interest rates to single digits. He argued that this failure to adjust the policy rate is discouraging for business sectors that were anticipating relief.
Magoon highlighted that, based on international standards, interest rates should incorporate a positive real rate of 2 to 4 percent above prevailing inflation. With inflation at 5.6 percent, he suggested the policy rate should be between 7.6 and 9.6 percent, a level he believes the State Bank could have feasibly adopted.
Businesses, Magoon noted, were anticipating a reduction to at least 7-8 percent, which they believe would have alleviated financial strain and stimulated economic activity. He pointed out that the high cost of financing, coupled with surging business expenses and energy tariffs, is putting additional pressure on industrial and commercial operations.
Magoon urged the government and the central bank to reassess their approach, emphasizing that a single-digit interest rate is not only achievable but necessary for economic recovery and to bolster business confidence.
The post Policy Rate Decision Disappoints Business Community: FPCCI Criticizes Central Bank’s Move appeared first on Pakistan Business News.