The President of the Korangi Association of Trade and Industry (KATI) has expressed disappointment over the State Bank of Pakistan’s decision to set the policy rate at 12 percent in its latest monetary policy.
The President KATI, Junaid Naqi, believes that the policy fails to align with the current economic conditions, with inflation at its lowest point in years and the rupee showing stability.
Naqi argued that the policy rate should have been reduced to a single-digit figure to support economic growth.
He emphasized that high interest rates are placing a severe burden on local industries, exporters, and small and medium enterprises (SMEs), which are vital to the country’s economy.
The high cost of borrowing has made it difficult for businesses to access working capital, hindering production and investment.
According to Naqi, SMEs are facing decreased productivity, rising unemployment, and reduced private sector participation. He warned that the current policy could further depress industrial output and discourage investment, leading to long-term economic setbacks.
READ: Monetary Policy: SBP cuts interest rate by 1pc
Naqi urged the government and State Bank of Pakistan to reconsider the current policy and adopt measures that will stimulate industrial growth, ease financial pressures on businesses, and contribute to the country’s economic recovery.
He stressed the need for a business-friendly monetary policy to ensure sustainable growth in the industrial sector.
Earlier in the day, the Karachi Chamber of Commerce & Industry (KCCI) expressed strong dissatisfaction with the State Bank of Pakistan’s (SBP) decision to implement a modest 1 percent reduction in the policy interest rate.
Muhammad Jawed Bilwani, President of KCCI, described the move as insufficient to tackle Pakistan’s ongoing economic challenges and unlock growth potential.
Bilwani criticized the SBP’s decision, stating that the 1 percent cut fails to address the critical financial strain faced by businesses, particularly small and medium enterprises (SMEs).
He pointed out that despite the Prime Minister’s assurances of reducing the interest rate, the SBP maintained the rate at 12 percent, which the business community finds puzzling.
KCCI had previously discussed this issue with Prime Minister Shehbaz Sharif, but the nominal cut did not meet expectations.
