FPCCI Vice President Criticizes Central Bank’s Policy Rate Decision

KARACHI: Muhammad Aman Paracha, Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has criticized the State Bank of Pakistan’s decision to maintain the policy interest rate at 11 percent. He described the decision as “incomprehensible” given the country’s current economic conditions.

In a statement, Paracha argued that the central bank’s policy contradicts existing economic realities and fails to support growth-oriented measures. He stressed the importance of a balanced monetary policy with a single-digit interest rate to boost industrial output, create employment opportunities, and stabilize prices.

Paracha cited official government data indicating that inflation had dropped to 3 percent in August 2025. He suggested that the significant decline in inflation supports the case for reducing the policy rate. Paracha proposed that the rate should be reduced to single digits and eventually to a range between 6 to 7 percent. This adjustment, he believes, would align fiscal policy with current economic trends and stimulate growth.

He further warned that Pakistan’s interest rate remains higher than those of other countries in the region, negatively affecting business confidence, discouraging investment, and increasing production costs. Paracha noted that high interest rates limit currency circulation and restrict economic activity, which ultimately impedes national economic recovery.

The FPCCI Vice President emphasized that maintaining high borrowing costs would continue to burden the business community, disrupt industrial planning, and harm investor sentiment. He concluded by stating that to keep Pakistani businesses competitive globally and foster a pro-growth environment, the policy rate must be reduced to single digits without delay.