UBG Pushes for 6 Percent Interest Rate Amid Inflation Drop

Lahore: In a significant move, the Vice Chairman of the United Business Group (UBG) North Zone, Ch. Javed Iqbal, has called for a unified business advocacy effort urging the State Bank of Pakistan to reduce the policy rate to 6 percent in its upcoming monetary policy announcement on July 30, 2025.

The appeal comes as the central bank faces increasing pressure to adjust its monetary policy in light of improving inflation indicators. Inflation has decreased to 3.20 percent in June from 3.50 percent in May, with the Consumer Price Index at a mere 0.3 percent. Despite these figures, the current benchmark interest rate stands at 11 percent, a level Iqbal argues is disconnected from the economic realities.

A reduction in the rate to 6 percent, according to Iqbal, would stimulate industrial activity, enhance export competitiveness, and boost private sector investment. Importantly, it could also save the government Rs 3.5 trillion in debt servicing costs, a significant fiscal relief that could be redirected to development and poverty alleviation.

Iqbal’s call reflects strategic coordination within the UBG under the leadership of SM Tanveer, the Patron-in-Chief. Tanveer’s advocacy for growth-oriented policies has gained support, highlighting the gap between the policy rate and inflation, which stands at a 7.8 percentage point differential—one of the highest in recent years.

The Monetary Policy Committee had maintained a cautious approach in its previous meeting on June 16, 2025, keeping the policy rate at 11 percent due to inflation and external sector concerns. However, recent data supporting disinflation strengthens the case for a more aggressive policy easing.

Industry observers see the UBG’s coordinated advocacy as a sign of maturity in Pakistan’s business policy discourse. This unified stance has bolstered the organization’s influence in monetary policy debates, positioning it as a credible advocate for pro-growth reforms.

As the State Bank prepares for its announcement, the alignment of business advocacy, favorable inflation trends, and fiscal factors creates a strong case for policy easing, with Javed Iqbal confident that sustained pressure from stakeholders can guide monetary policy to more growth-supportive levels.