Karachi, June 16, 2025 – Leading representatives of Pakistan’s business community have expressed strong disappointment over the State Bank of Pakistan’s (SBP) decision to maintain the policy rate at 11% in its latest monetary policy announcement.
Despite signs of cooling inflation and growing pressure from industry stakeholders, the central bank opted for a status quo approach — a move widely viewed as detrimental to industrial recovery.
Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), stated that the business community is disheartened by the SBP’s continued reliance on a high policy premium against inflation. He noted that the Consumer Price Index (CPI) fell to 3.5% in May 2025, while the policy rate remains at 11%, creating a spread of 750 basis points — a disconnect that he called “economically unjustifiable.”
Sheikh emphasized that FPCCI, after comprehensive consultations with the entire business community, had urged the SBP to slash the policy rate by 400 basis points to bring it in line with inflation expectations and support Prime Minister Shehbaz Sharif’s industrial growth agenda. He highlighted that inflation is projected to remain between 2–4% in the coming months, strengthening the case for a rate cut.
Muhammad Jawed Bilwani, President of the Karachi Chamber of Commerce & Industry (KCCI), echoed similar concerns. He criticized the SBP for ignoring both economic indicators and market sentiment. “Maintaining such a high policy rate stifles economic activity and increases the cost of doing business. Our exporters are losing ground internationally, while local industries suffer from reduced competitiveness,” he remarked.
Bilwani warned that unless the central bank supports growth through accommodative monetary policy, Pakistan risks prolonged stagnation. He acknowledged the impact of global uncertainties — including the Iran-Israel conflict and surging oil prices — but insisted that these should not become an excuse to paralyze domestic industry.
Meanwhile, Junaid Naqi, President of the Korangi Association of Trade and Industry (KATI), offered a more cautious view, acknowledging global and regional instability as temporary justifications for holding rates. However, he insisted that the SBP must begin reducing the policy rate once stability returns, calling for a cut of at least 2–3 percentage points in the next review to energize the business community and reach the government’s 4.2% GDP growth target.
Across the board, the business community maintains that a lower policy rate is critical to revitalizing exports, reducing production costs, and creating a supportive environment for sustainable industrial growth — especially in today’s uncertain global landscape.
President of SITE Association of Industry, Ahmad Azeem Alvi, has expressed deep disappointment over the State Bank of Pakistan’s decision to keep the policy rate unchanged at 11% instead of reducing it.
He stated that this was a good opportunity to bring the policy rate down to single digits, but unfortunately, it was not utilized. Even a 2% cut in the policy rate would have sent a positive message to the business community, especially at a time when the federal budget has just been announced.
He stressed that the government is in dire need of good advisors who truly understand the economy and are well aware of ground realities, so that economic stability can be achieved without adversely affecting trade and industry.
“If positive decisions are taken, they will lead to positive results and gain popularity among the public,” he added.
He also expressed hope that the policy rate would be brought down to single digits in the next monetary policy announcement.