Karachi: In a recent statement, Mr. Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), expressed significant dissatisfaction with the recent adjustments in the monetary policy, particularly criticizing the central bank’s decision to cut rates by 200 basis points. Despite this reduction, he described the measures as insufficient, especially in light of the pressing economic challenges facing Pakistan’s business, industry, and trade sectors.

According to Federation of Pakistan Chambers of Commerce and Industry, Mr. Sheikh highlighted the misalignment between the real interest rates and core inflation, which remains high at 9.6 percent as of August 2024. He argued that the current monetary policy stance is restrictive and detrimental to economic growth. The core inflation forecast for September is slightly lower, at 8 percent, and with international oil prices decreasing, there was an opportunity for a more substantial rate reduction to stimulate business activity.

Further, Mr. Sheikh reiterated the need for the central bank to immediately lower interest rates to 12 percent to enhance the competitiveness of Pakistani exporters. He also urged the government to adjust electricity tariffs and renegotiate power purchase agreements to reduce the cost of doing business. He emphasized the importance of transparency and consultation in economic policymaking, questioning the government’s strategy regarding the impending International Monetary Fund (IMF) program and its potential impacts on the business environment.

Mr. S. M. Tanveer, Patron-in-Chief of United Business Group, also weighed in, advocating for a monetary focus on core rather than general inflation to more accurately reflect economic realities and improve policy effectiveness. Despite significant increases in policy rates over recent years, he noted that general inflation has remained unresponsive, underscoring the need for policies grounded in local economic conditions.