Karachi: Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), expressed profound disappointment over State Bank of Pakistan’s (SBP) decision to maintain the key policy rate at 10.5%. The apex trade body characterized this as counterproductive and strictly disappointing given the need for industrial revival in Pakistan.
Ikram Sheikh stated that the business community had demanded a substantive reduction of 3.5% or 350 basis points to bring the policy rate down to 7%, aligning it with inflation rates around 5%. He pointed out that core economic indicators were signaling a requirement for growth, yet the SBP’s cautious approach was puzzling in light of these developments.
The industry is currently facing an existential crisis due to high energy tariffs and substantial borrowing costs. The FPCCI chief emphasized that a 3.5% reduction would have been necessary to kickstart the economy; instead, they received a status quo decision that won’t help improve the cost of doing business.
Ikram Sheikh warned that persistent high cost of capital is the primary driver behind industrial closures and Pakistani exporters’ inability to compete internationally. He stressed that if monetary policy isn’t corrected in the next review to reach single digits by fiscal year targets, export growth and industrial expansion will remain elusive.
The FPCCI demanded an immediate review of the SBP’s stance on interest rates to match inflation figures, a clear roadmap for bringing down the policy rate to 7%, and declaration of an “Industrial Emergency” to prevent manufacturing units from shutting down due to high input and finance costs.
Senior Vice President Saquib Fayyaz Magoon highlighted the gap between policy rates and inflation. He argued that in Pakistan, real interest rates remain unsustainably high compared to regional competitors. This decision continues to penalize the private sector, restrict access to finance for SMEs, and hinder export competitiveness.
Fayyaz added that, when inflation has receded, keeping the policy rate at double digits is unjustified. The SBP missed a crucial opportunity to align monetary policy with government visions for industrial growth and export facilitation.