FPCCI recommends cut in key policy rate by 100bps

FPCCI recommends cut in key policy rate by 100bps

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended a reduction of 50 – 100 basis points in the key policy rate, according to a statement issued on Monday.

The existing policy rate is seven per cent.

A monetary policy survey – conducted recently prior to SBP’s Monetary Policy Committee (MPC) meeting later in this month – conducted by Policy Research Unit (PRU), Policy Advisory Board, FPCCI has recommended a reduction in the policy rate by 50-100 basis points.

The FPCCI recommended that key policy rate should not be above six per cent to promote business activities and economic growth.

The president of the apex body Mian Nasser Hyatt Maggo in a statement on Monday said that the policy interest rate must not be over 6 per cent. “And if SBP wants to promote business activities and economic growth in the country, it should be brought down to 5 per cent.”

He also pointed out that policy interest rate in the region is 3-4 per cent only and we have to compete with the region.

FPCCI has recently established Policy Advisory Board under the chairmanship of former Federal Secretary Mohammad Younus Dagha.

It aims to provide research-based expert input for policy advocacy, ease of doing business initiatives and formalizing the business community’s inputs on policies to various governmental departments, institutions and departments.

Policy Advisory Board of FPCCI aims to formalize collective opinion of the private-sector for the formulation of business-friendly policies; with an objective to foster economic growth and development.

The survey results show that 84 per cent of the businessmen and researchers in monetary policy suggest that there should be no increase in the policy rate and nearly half of them suggest a cut between 50-100 bps.

The policy brief issued on the occasion has noted with a sigh of relief that the core inflation in Pakistan – the most definitive indicator for setting up the policy rate for any central bank – has significantly subsided to 6.3 per cent in August 2021 as compared to 6.9 per cent in July 2021.