KCCI Criticizes Minimal Interest Rate Cut by State Bank of Pakistan

KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has criticized the State Bank of Pakistan’s decision to reduce the policy interest rate by 0.5 percent, arguing that the minor adjustment fails to address the pressing economic challenges and does little to boost business confidence.

Muhammad Rehan Hanif, President of KCCI, expressed concerns that the reduction is insufficient given the country’s economic conditions. He highlighted that businesses are already grappling with high operational costs, and the nominal rate cut does little to alleviate these burdens.

Hanif pointed out that despite inflation falling, borrowing costs remain prohibitively high in Pakistan compared to regional counterparts like China, India, and Bangladesh. This disparity, he argued, hinders industrial growth, export potential, and job creation in Pakistan.

He noted that Pakistani industries face multiple cost pressures, including high energy tariffs and fuel prices, excessive taxes, and fluctuating exchange rates. These challenges, compounded by a high interest rate regime, stifle economic activity and deter investment.

The KCCI president emphasized that affordable credit is essential for achieving the government’s goals of industrial revival and export growth. Without it, businesses are likely to delay expansion, shut down operations, and cut jobs, reducing overall economic output and government revenues.

Rehan Hanif reiterated that while the business community supports economic stabilization efforts, a more substantial interest rate cut is necessary to stimulate growth and competitiveness. He warned that a cautious approach could prolong economic stagnation and called for decisive measures to spur economic progress.