High Interest Rate Sparks Concern Amid Declining Inflation

KARACHI: The President of the SITE Association of Industry, Ahmed Azeem Alvi, has voiced significant concern regarding the State Bank of Pakistan’s decision to maintain the policy rate at 11%. According to a statement from Mr. Alvi, the central bank’s move disregards the business community’s longstanding demand for a reduction in the interest rate to single digits, thereby hindering hopes for economic recovery and growth.

Mr. Alvi questioned the logic behind the decision not to reduce the policy rate, especially in the face of declining inflation. He called upon the Finance Minister and the Governor of the State Bank to provide a justification for this decision and to engage the business community in dialogue.

He emphasized that Pakistan is receiving positive signals from the international community following its recent success in the Marka-e-Haq. He stated that at this critical point, the decision to maintain high interest rates could obstruct the nation’s economic progress. Mr. Alvi pointed out that the country is united and on the verge of achieving major milestones, suggesting that this is an opportunity for bold economic decisions.

The SAI Chief reiterated the business community’s call for a gradual reduction of the policy rate to between 5% and 6%. He argued that such a move would stimulate economic activity, attract investment, and create employment opportunities. By keeping the rate at 11%, the authorities have let down both investors and industrialists.

Ahmed Azeem Alvi expressed hope that the government, along with the Finance Minister and the Governor of the State Bank, would recognize the urgency of the situation. He urged them to engage with the business sector and take steps to restore economic confidence and accelerate recovery.