President of the Karachi Chamber of Commerce and Industry (KCCI) Muhammad Jawed Bilwani today voiced significant dissatisfaction with the State Bank of Pakistan’s (SBP) decision to keep the policy rate steady at 11 percent.
He criticized the move as excessively cautious and detrimental, especially considering the current decline in inflation and the adverse effects on industrial competitiveness.
Muhammad Jawed Bilwani, in a statement released on Monday, highlighted that the business community was anticipating a reduction in the interest rate to a singledigit figure to stimulate economic activities, decrease operational costs, and aid floundering industries. ‘By opting to uphold the existing policy rate, the SBP has overlooked critical market indications and dampened the morale of businesses at a crucial time when economic stimulation is desperately needed,’ he stated.
Bilwani pointed out that inflation rates are stabilizing, with independent forecasts suggesting it will hover between 6 to 7 percent for the fiscal year 2026, contrary to the IMF and government predictions of 7.5 percent. Despite these projections and a recent inflation increase to 3.5 percent in May, which Bilwani notes is comparably low, the SBP chose not to lower the interest rate, a decision he deeply regrets.
The high interest rates, according to Bilwani, have significantly affected the competitiveness of Pakistan’s industrial sectors both regionally and globally. ‘Our exporters are losing their international market share, while local manufacturers are struggling against less expensive imports. A reduction in the rate would have been a crucial relief needed for the revival of our industries and job creation,’ he explained.
Acknowledging global tensions, such as the conflict between Iran and Israel, and the surge in oil prices, Bilwani argued that the SBP’s conservative approach unduly burdens domestic enterprises. He emphasized that while fiscal tightening is already in effect, there was substantial scope for monetary easing to support the economy.
Bilwani concluded by urging the central bank to adopt a more proactive and considerate stance towards the productive sectors of the economy. ‘In these challenging economic times, it is imperative for monetary policy to play a supportive role. Unfortunately, the decision today reflects a hesitation to take decisive, growthoriented actions. It is time for the SBP to act boldly and support the nation’s economic growth,’ he appealed.