Karachi: The Korangi Association of Trade and Industry (KATI) has voiced strong criticism of the State Bank of Pakistan's recent decision to reduce the interest rate by only 100 basis points to 19.5%. KATI President Johar Qandhari described the adjustment as grossly inadequate, given the economic challenges facing Pakistan's industrial sector.

According to Korangi Association of Trade and Industry, Qandhari argued that the modest reduction fails to address the fundamental issues plaguing businesses, including rampant inflation and the prohibitive cost of capital. He emphasized that the persistently high interest rates have stifled economic growth and exacerbated capital shortages, putting additional pressure on the small and medium enterprise (SME) sector and hindering the ability of companies to secure affordable financing.

Qandhari pointed out that despite inflation rates being reported at 11% in May, the decision to maintain a high interest rate has only led to further inflationary pressures, now surpassing 12%. He stressed the need for a substantial policy rate cut to support industrial growth and prevent potential economic destabilization.

Highlighting the broader social impact, Qandhari noted the growing disparity between the rich and the poor, with the affluent benefiting from high returns on bank deposits while those without substantial savings face increasing hardship. He called on the government to urgently revise its monetary policy to prevent further industrial closures and mitigate the risk of a severe economic downturn.