Karachi: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) expressed dissatisfaction following the State Bank of Pakistan's decision to maintain the current policy rate, despite the declining inflation rates. Business leaders had anticipated a substantial reduction in the interest rate to align with the country's economic growth objectives.

According to Federation of Pakistan Chambers of Commerce and Industry, the decision to keep the policy rate at 12.0 percent, despite inflation figures standing at just 1.5 percent as of February 2024, has left the business, industry, and trade community disappointed. Atif Ikram Sheikh, President of FPCCI, emphasized that the policy rate reflects a considerable premium over core inflation.

FPCCI had called for a 500 basis point rate cut in the State Bank's monetary policy committee meeting, aiming to synchronize monetary policy with the Special Investment Facilitation Council's vision and the Prime Minister's economic growth goals. Business leaders argue that the current policy rate hinders economic expansion and export growth.

Mr. Sheikh highlighted expectations of core inflation remaining between 1 to 3 percent for the upcoming months, urging a reduction in the policy rate to 3 to 4 percent by the end of the fiscal year 2025. He noted that stable international oil prices, a major determinant of inflationary pressures, provide an opportunity for a substantive rate cut.

The FPCCI also pointed to Pakistan's competitive disadvantage in terms of business costs and access to finance. Mr. Saquib Fayyaz Magoon, SVP FPCCI, suggested that lowering interest rates to single digits could enhance the competitiveness of Pakistani exporters. He emphasized the need for supportive measures such as stable electricity tariffs and consistent gas supply to facilitate export growth.

FPCCI reiterated its call for a shift in monetary policy to support industrial and export activities, advocating for measures that would ease the cost of doing business in Pakistan.