Inflation Hits 9-Year Low, FPCCI Urges Sharp Interest Rate Cut

Karachi: Mr. Atif Ikram Sheikh, President FPCCI, expressed dissatisfaction with Pakistan’s current monetary policy, following the State Bank of Pakistan’s (SBP) modest reduction of 100 basis points in its latest Monetary Policy Committee (MPC) meeting. He highlighted that inflation in the country is at its lowest in nine years.

According to a statement by Federation of Pakistan Chambers of Commerce and Industry, inflation stood at 1.5 percent in February 2025 and 2.4 percent in January, while the policy rate remains at 12.0 percent. This reflects a premium of 1050 basis points over core inflation.

Mr. Sheikh announced that after discussions across various industries, FPCCI demands a 500 basis points rate cut in the upcoming MPC meeting on March 10, 2025. This adjustment is aimed at aligning monetary policy with the Special Investment Facilitation Council’s vision and the Prime Minister’s economic growth goals.

Industry estimates predict core inflation will range from 1 to 3 percent in the last quarter of the fiscal year. Mr. Sheikh highlighted that stable international oil prices are expected, with sufficient supply ensuring prices remain in the lower $70s per barrel. This stability, he argued, provides the necessary conditions for a significant rate cut.

The FPCCI President emphasized that the cost and ease of doing business in Pakistan lag behind competitors in export markets. With a continued decline in inflationary pressures, Mr. Sheikh sees supporting industry and exports as critical to economic growth.

Mr. Saquib Fayyaz Magoon, FPCCI’s Senior Vice President, called for reducing the interest rate to single digits. This move, he suggested, would help Pakistani exporters compete regionally and internationally by lowering capital costs, alongside a government commitment to rationalize industrial electricity tariffs.