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The Korangi Association of Trade and Industry (KATI) has urged the State Bank of Pakistan (SBP) to reduce interest rates in its upcoming monetary policy, as the inflation rate is currently at its lowest in nine years.
Ejaz Ahmed Sheikh, acting president of KATI, emphasized that inflation dropped to 1.5 percent in February 2025, marking a significant decline.
He argued that with inflation consistently falling, keeping high interest rates is unjustified and is harming industries, investment, and exports.
He highlighted that the Consumer Price Index (CPI) decreased by 0.8 percent in February, and the average inflation rate for the first eight months of FY2024-25 stood at 5.85 percent, a sharp drop from 27.96 percent last year. Despite this, the current 12 percent interest rate remains a burden on businesses and economic growth.
READ: Monetary Policy: SBP cuts interest rate by 1pc
“To lower business costs and boost economic activity, an immediate and significant interest rate cut is essential,” Sheikh stated, urging the SBP to adopt a realistic approach to support industries.
He called on the government and policymakers to recognize business challenges and shift away from tight monetary policies. “This is the time for practical steps toward economic stability rather than restrictive policies,” he stressed.
Sheikh concluded that reducing interest rates will encourage investment, create jobs, and boost exports, ultimately strengthening Pakistan’s economy.
