KCCI Criticizes State Bank’s Decision to Maintain 11% Interest Rate

KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has expressed dissatisfaction with the State Bank of Pakistan’s decision to keep the benchmark interest rate steady at 11 percent, describing it as a lost chance to alleviate the financial burden on businesses.

Muhammad Rehan Hanif, President of KCCI, voiced the business community’s expectation for a rate cut, suggesting a decrease of at least 200 basis points to around 9 percent. Hanif argued that the decision not to lower the rate does not align with the current economic conditions, where inflation is reportedly under control.

Hanif further noted that Pakistan’s interest rates are higher compared to regional competitors, calling for alignment in monetary policy. He suggested that even a modest reduction to 10 percent would have been beneficial.

The KCCI President highlighted the ongoing issue of limited credit flow to the private sector, while government borrowings remain high. Although the interest rate has improved from a previous high of 23 percent, the current rate still poses significant challenges for businesses dealing with increased costs.

Reflecting on past commitments, Hanif mentioned a government promise from the end of 2024 to reduce interest rates to single digits, a pledge yet to be fulfilled. This unmet promise has left the business community disheartened, as they anticipated a more growth-oriented monetary policy.

Hanif warned that the private sector could not sustain the high cost of borrowing alongside rising utility tariffs. For industrial revival, job creation, and export enhancement, he urged the government to urgently reduce both interest rates and utility costs.

Despite persistent challenges, Hanif commended the business community’s resilience, cautioning that without lowering the cost of doing business, economic recovery in Pakistan would remain difficult to achieve.