Karachi: Leaders of the United Business Group (UBG), including S.M. Tanveer, Zubair Tufail, Khalid Tawab, Hanif Gohar, and Syed Mazher Ali Nasir, have called for more aggressive cuts to the policy rate than the recent 100 basis points reduction made by the State Bank of Pakistan (SBP). The group, representing a significant segment of the business community, expressed dissatisfaction with the current 19.5% rate, advocating for reductions of 300-500 basis points to lower the high cost of doing business and stimulate economic growth.

According to United Business Group, the SBP's recent rate cut, though a step in the right direction, falls short of the expectations of business leaders who are grappling with an economic environment hampered by high interest rates. Despite a marked decrease in inflation from 38% to 11%, attributed to government measures and agricultural outputs, the UBG argued that the economic benefits of lower rates aligned with international trends could significantly foster private sector borrowing and expansion.

The business leaders emphasized the positive impact of excellent crop yields and a stable rupee on easing inflation, but highlighted ongoing challenges such as the inflationary effects of rising power tariffs, increased petroleum development levies, and new taxes on essential goods. They advocate for further rate cuts as crucial support for the business community to overcome these obstacles. The UBG also suggested that the government could help manage inflation and make room for further reductions in the policy rate by lowering taxes on power tariffs.