Karachi: In a recent statement, Altaf A. Ghaffar, the Acting President of the Karachi Chamber of Commerce and Industry (KCCI), criticized the State Bank of Pakistan’s decision to cut the interest rate by only 2 percent to 17.5 percent. He argued that the reduction was insufficient given the current downward trend in inflation, which has recently dropped to a single digit.

According to Karachi Chamber of Commerce and Industry, despite the reduction, the new interest rate of 17.5 percent remains prohibitively high for fostering economic growth and easing financial strain on businesses and consumers. Ghaffar emphasized the need for a more aggressive approach, suggesting that rates should quickly be brought down to around 7 to 8 percent to align with rates in other regions globally.

The business community, Ghaffar noted, would greatly benefit from a further reduction in interest rates to a single digit, as it would encourage borrowing and promote expansion through lower business costs. He highlighted that the State Bank has been progressively lowering rates, marking this as the third consecutive reduction from a previous high of 22 percent. However, he maintained that these efforts need to be intensified to stimulate significant economic recovery and assist the manufacturing sector, which has been particularly hard hit by high borrowing costs.

Ghaffar also pointed out that the recent decrease in inflation in Pakistan was not a direct result of tight monetary policies but was due to administrative measures by the government and better agricultural outputs. He also attributed the stability of the rupee as a contributing factor to controlling inflation, given the country’s heavy reliance on imported goods.