FPCCI Slams State Bank’s Decision To Maintain 11% Policy Interest Rate

Islamabad: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President, Atif Ikram Sheikh, has sharply condemned the State Bank of Pakistan’s choice to hold the benchmark interest rate at 11%, labeling it “baffling” given the present financial climate. Sheikh voiced serious apprehension about the detrimental effects of this action on the commercial landscape and the wider national economy.

Sheikh contended that, considering the current inflationary trends, the policy rate should ideally be lowered to 6-7% to harmonize with economic realities and encourage expansion. He emphasized that a rate decrease could substantially reduce the government’s debt load by roughly PKR 3,500 billion, offering crucial financial relief.

Sheikh highlighted that price increases have fallen to 3% in August 2025, according to official government figures. “Pakistan’s borrowing cost is considerably greater than those of other regional nations,” Sheikh observed, indicating that the high rate impedes economic actions and discourages investment. He stressed that for enterprises to flourish and stay competitive, the policy rate must be brought into single digits.

FPCCI Senior Vice President (SVP), Saquib Fayyaz Magoon, underlined that sustaining elevated borrowing costs directly impacts manufacturing expenses, subsequently fueling inflation. “A single-digit rate would lower production expenditures, making commodities and services more accessible and ultimately curbing inflation,” he clarified. He added that high rates restrict monetary flow, hindering commercial activities and expansion.

Magoon also mentioned assurances from Federal Finance Minister Muhammad Aurangzeb, who had earlier suggested an impending rate cut. The decision to maintain the current level, consequently, represents a setback to the commercial sector’s anticipations.

FPCCI Vice President (VP) and Sindh Regional Chairman, Abdul Mohamin Khan, cautioned that an unchanged rate will severely weaken the business climate, deter investment, and impede financial recovery. He urged the State Bank to reassess its position and implement strategies that support businesses, reduce financing expenses, and promote economic expansion.

Khan reiterated that the business sector is the foundation of Pakistan’s financial system. “A supportive monetary policy with a single-digit benchmark rate is vital to enhance industrial production, generate employment, and regulate prices,” he stated. Khan called upon the State Bank to promptly tackle these issues and align its policies with the economy’s requirements.