Karachi, January 27, 2025 – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed its surprise and disappointment over the State Bank of Pakistan’s (SBP) decision to reduce the policy rate by just 100 basis points, despite the marked improvement in key economic indicators.
FPCCI President Atif Ikram Sheikh, in a statement issued on Monday, highlighted the dissatisfaction of Pakistan’s business, industrial, and trade communities with the current monetary policy. He emphasized that the policy continues to maintain an unsustainable premium in relation to core inflation. According to the government’s own figures, inflation stood at 4.1 percent in December 2024, while the SBP’s policy rate remains at a high 12.0 percent, reflecting a significant premium of 790 basis points over core inflation.
After engaging with representatives from various sectors and industries, FPCCI has formally called for a more substantial policy rate reduction. The chamber proposed a 500 basis point cut in the SBP’s policy rate during the recent Monetary Policy Committee (MPC) meeting. The FPCCI argued that such a move would align the monetary policy with the broader vision of the Special Investment Facilitation Council (SIFC) and support the Prime Minister’s economic goals, particularly focusing on accelerating economic growth and boosting exports. With core inflation projected to remain between 3 to 4 percent for January 2025, FPCCI believes that a more aggressive rate cut would be both appropriate and timely.
Atif Ikram Sheikh further explained that international oil prices are expected to remain relatively stable, which should mitigate one of the key factors driving inflation in Pakistan. Given this, he stressed that the Pakistani authorities now have the ideal conditions to implement a meaningful rate cut, urging the SBP to move away from regressive and contractionary monetary policies that negatively impact businesses.
The FPCCI president reiterated the body’s longstanding position that the cost of doing business, ease of doing business, and access to finance in Pakistan are among the lowest in comparison to its competitors in global export markets. With inflationary pressures showing a consistent downward trend for several months, he underscored that the only effective strategy to revive the economy is to provide much-needed support to industries and exports, rather than continue with restrictive monetary policies.
FPCCI’s call reflects the broader sentiment within Pakistan’s business community that more aggressive and forward-looking monetary policy actions are necessary to drive sustainable economic growth.