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Home » Interest rate status quo displeases businesses – Business
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Interest rate status quo displeases businesses – Business

adminBy adminMarch 11, 2025No Comments3 Mins Read
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KARACHI: Most owners of big factories hailed the State Bank’s cautious approach to keep the interest rate unchanged at 12 per cent on Monday, but the bulk of the business community was up in arms against the central bank for not bringing down the policy rate by 500 basis points even though inflation was as low as 1.5pc last month.

Abdul Aleem, Secretary General of the Overseas Investors Chambers of Commerce and Industry (OICCI), said: “I am satisfied that SBP made a very sound decision by not surrendering to pressure for rate cut. The economy needs sustainable steps to overcome challenges and improve investors’ confidence.”

Ehsan Malik, the CEO of the Pakistan Business Council (PBC), said the Monetary Policy Committee (MPC) of the SBP had opted to follow a cautious approach by maintaining the policy rate at 12pc.

’’With core inflation sticky at 7.8pc, pressure building on the external account due to rising imports and weak financial flows, along with declining forex reserves, are all valid reasons for this cautionary stance,“ he said. “Economic stability is still fragile and a risk-averse approach is justified.”

Disappointment

Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the entire business and trade community was disappointed with the monetary policy as the central bank continues to base its decision on a heavy premium vis-à-vis core inflation.

“The SBP kept the policy rate at 12pc even though inflation was at 1.5pc last month, reflecting a premium of 1,050 basis points vis-à-vis core inflation.”

FPCCI favours reduction of 500bps in policy rate

The FPCCI had called for an immediate and single-stroke rate cut of 500bps to rationalise the monetary policy and align it with the vision of Special Investment Facilitation Council (SIFC) for revving up economic growth and exports.

Ahmed Azim Alvi, who heads the SITE Association of Industry, termed the unchanged policy rate disappointing, saying the State Bank had ignored persistent appeals by the business community to bring down the interest rate to single digits. He urged the central bank to gradually reduce the policy rate and bring it to single digit so that loans can be accessed at lower rates.

Ejaz Ahmed Sheikh, acting president of the Korangi Association of Trade and Industry (KATI), said keeping the interest rate unchanged was no catalyst for economic growth and had dampened the industry’s expectations. “This decision is a letdown for the business community and could further retard the economy,” he said.

Sheikh Umer Rehan, the Chairman of Pakistan Vanaspati Manufacturers Association, stressed that cuts in interest rate were needed to stabilise the economy. “Keeping the rate unchanged will only exert pressure on the industrial sector,” he added.

Salim Vali Muhammad, Chairman of the Pakistan Chemicals & Dyes Merchants Association (PCDMA), said keeping interest rates unchanged was “not in keeping with the ground reality”.

Published in Dawn, March 11th, 2025



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