KATI Calls for Major Interest Rate Reduction as MPC Meeting Approaches

Karachi: Junaid Naqi, President of the Korangi Association of Trade and Industry (KATI), has urged the State Bank of Pakistan to implement a significant cut in the policy interest rate at the upcoming Monetary Policy Committee (MPC) meeting scheduled for July 30. With inflation figures dropping to 3.2% in June, Naqi argues that the current policy rate of 11% is unjustifiably high.

Naqi outlined the struggles faced by Pakistan’s industrial sector, noting that factories are operating under partial capacity, new investments have dwindled, and business confidence remains low. He emphasized the urgent need for governmental and central bank intervention to rejuvenate industrial activities and enhance export levels.

In a broader economic context, Naqi highlighted that Pakistan’s GDP growth reached only 2.1% in the past fiscal year, a rate considerably lower than neighboring countries. He expressed optimism that with adequate support and a business-friendly environment, Pakistan’s growth rate could see significant improvement.

Criticizing existing monetary policies, Naqi described them as outdated and counterproductive to economic progress. He drew attention to global trends where countries are reducing interest rates to boost business activity, contrasting with Pakistan’s adherence to higher rates.

Naqi called for an immediate reduction in the policy rate to relieve the industry. He warned of potential consequences such as rising unemployment, declining investments, and unmet revenue targets if industries continue to lack support.

He urged the central bank to base its decisions on current economic realities, stating that a stable economy relies on realistic and responsive policies. Naqi expressed hope that the government and SBP will acknowledge the industrial sector’s challenges and take concrete measures, including a significant interest rate cut, to stabilize the economy.