Business Associations Criticize SBP's Decision to Maintain Policy Rate at 11.5%
KARACHI: Leading business and industry associations on Monday expressed disappointment over the State Bank of Pakistan's (SBP) decision to keep the policy rate unchanged at 11.5%, arguing that this move continues to burden businesses with high borrowing costs and slows economic recovery. The criticism followed the SBP's Monetary Policy Committee (MPC) announcement to hold the benchmark interest rate steady, citing inflationary pressures and evolving economic conditions.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Karachi Chamber of Commerce and Industry (KCCI), and Korangi Association of Trade and Industry (KATI) urged the central bank to adopt a more accommodative monetary stance and gradually reduce the policy rate to single digits.
FPCCI President Calls for Single-Digit Rate
FPCCI President Atif Ikram Sheikh termed the decision a continuation of contractionary monetary policy detrimental to economic growth and industrial expansion. He argued that keeping the policy rate in double digits would accelerate de-industrialization, undermine export competitiveness, and hamper efforts to earn foreign exchange through exports. "The economy cannot transition to a growth model without a rationalized, single-digit interest rate that aligns with domestic realities and investment objectives," Sheikh said. He maintained that inflationary pressures are likely to ease in the coming months due to improving global conditions, including expectations of reduced geopolitical tensions and stabilization in energy markets.
KCCI Acting President Expects Rate Reversal
Acting KCCI President Muhammad Raza said the business community had expected the central bank to reverse at least the 100-basis-point increase introduced during the previous monetary policy review. He noted that improving economic indicators and easing global uncertainties had created room for reducing borrowing costs. "The business community expected that the State Bank would withdraw the previous increase and send a positive signal to investors and industrialists," he said. Raza argued that high interest rates continue to increase the financial burden on businesses at a time when industries are already facing rising energy tariffs, taxation pressures, and higher operational costs. He stressed that sustainable economic growth requires affordable access to finance and called for monetary policy to be aligned with the goals of industrialization, export promotion, and employment generation.
KATI President Highlights SME Concerns
Korangi Association of Trade and Industry President Muhammad Ikram Rajput also voiced concern over the decision, saying industries had anticipated a more supportive policy stance in light of relatively stable inflation and improving macroeconomic conditions. He said expensive borrowing remains a major hurdle to private-sector investment, industrial growth, and job creation, particularly for small and medium enterprises (SMEs).
