Karachi, December 16, 2024 – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over the recent 2% reduction in the policy rate, terming it insufficient to address Pakistan’s economic challenges. The State Bank of Pakistan (SBP) announced the policy rate cut, reducing it from 15% to 13%, following months of declining inflation.
FPCCI President Atif Ikram Sheikh welcomed the move but emphasized the need for a more significant reduction. “While the 2% cut is a step in the right direction, it falls short of what the economy truly needs,” he said. Sheikh reiterated his earlier call for a 5% reduction, urging the SBP to adopt more aggressive measures to bring the policy rate into single digits.
Highlighting the current economic scenario, Sheikh noted that inflation has dropped to 4.9%, the lowest level in 78 months. “With inflation significantly under control, maintaining high-interest rates serves no purpose. The time to bring the policy rate down to single digits is now,” he added.
Sheikh acknowledged that the SBP had made progress, citing the cumulative 9% reduction in interest rates across five consecutive meetings since June 2024. However, he maintained that further cuts are essential to stimulate economic growth. “Economic indicators are moving in a positive direction, with foreign exchange reserves rising and a current account surplus providing stability. These conditions create a conducive environment for deeper rate cuts,” he said.
Senior Vice President of FPCCI, Saqib Fayyaz Magoon, also weighed in, stressing that lower interest rates would encourage economic activity and foster growth. “Reducing the policy rate to single digits will not only spur business activities but also lead to an increase in exports,” he stated.
Magoon reiterated the business community’s commitment to supporting government initiatives aimed at economic improvement. “We stand ready to back all decisions that contribute to stabilizing and growing Pakistan’s economy,” he concluded.
The FPCCI leaders urged swift and decisive action to capitalize on the current economic momentum and position Pakistan for sustainable growth in the months ahead.