The All Pakistan Textile Mills Association (APTMA) has called on the State Bank of Pakistan (SBP) to reduce the benchmark interest rate from the current 15% to 10%, emphasizing that such a move is crucial for revitalizing the economy.
In a statement, APTMA urged the central bank to take bold action by slashing the policy rate by 500 basis points during its upcoming meeting on Monday, December 16, 2024. The Association highlighted the pressing challenges faced by businesses and stressed the importance of fostering economic growth through supportive monetary policies.
“A substantial reduction in the policy rate will yield far-reaching benefits. Lower borrowing costs will bring bank mark-up rates back to single digits, making credit more accessible for businesses and consumers. This will stimulate investment, enhance industrial production, and create a positive momentum for economic growth,” APTMA stated in its press release.
APTMA also pointed to the declining inflation rate as a strong justification for monetary easing. The Consumer Price Index (CPI) fell to 4.9% in November 2024, a significant drop from 7.2% in October 2024. This downward trend, APTMA noted, provides ample room for the SBP to lower interest rates without risking inflationary pressures.
The Association cautioned that delaying such a move could lead to unnecessary economic setbacks, particularly as the government aims to bring interest rates back to single digits. “A timely reduction will strengthen investor confidence, enhance economic stability, and demonstrate the effectiveness of recent policy measures,” it added.
APTMA commended the efforts of Pakistan’s economic planners and the resilience of the business community in achieving recent economic gains. “We remain committed to supporting policies that drive growth and stability while ensuring the prosperity of Pakistan’s industries and people,” the statement read.
The Association also reaffirmed its readiness to collaborate with the government and other stakeholders to sustain and build upon these achievements. “Decisive action now will pave the way for a stronger, more dynamic economy,” APTMA concluded.
The call for an interest rate cut highlights the critical role of monetary policy in bolstering Pakistan’s economic recovery amidst evolving macroeconomic conditions.