Business Leaders Express Frustration Over Unchanged Monetary Policy

Karachi: Business and industry leaders in Pakistan have expressed their dissatisfaction with the State Bank of Pakistan’s decision to maintain the current policy rate, citing concerns over its disconnect with the nation’s inflation figures and economic needs. Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), conveyed the community’s disappointment after the central bank upheld the status quo in the latest monetary policy meeting.

Sheikh noted that despite the Consumer Price Index (CPI) standing at 3.50 percent in May 2025, the policy rate remains at 11.0 percent. This results in a significant premium of 750 basis points over the inflation rate, a situation he described as economically unjustifiable.

The FPCCI had advocated for a substantial cut of 400 basis points in the policy rate during the monetary policy committee meeting. This proposed reduction aimed to align the rate with the Special Investment Facilitation Council’s vision and the Prime Minister’s goals for industrial growth, import substitution, and export expansion.

With CPI projections ranging between 2 to 4 percent for June and July 2025, Sheikh argued for a policy rate reduction to 7 percent. He emphasized the need to support industry and exports, given the ongoing decline in inflationary pressures.

Saquib Fayyaz Magoon, Senior Vice President of FPCCI, added that lowering the interest rate to single digits is crucial. He argued that such a move would enhance the competitiveness of Pakistani exporters in regional and international markets by significantly reducing the cost of capital.