Karachi, March 5, 2025 – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly called for a substantial reduction of 500 basis points in the benchmark policy rate, citing the lowest inflation levels recorded in nearly a decade.
FPCCI President Atif Ikram Sheikh expressed concerns over the current monetary policy framework, stating that the business, industrial, and trade sectors of Pakistan remain dissatisfied with the high-interest rate regime. He emphasized that the State Bank of Pakistan’s (SBP) recent reduction of only 100 basis points on January 27 during its last Monetary Policy Committee (MPC) meeting was inadequate given the ongoing economic realities. According to Sheikh, inflation has now reached a nine-year low, making a significant policy rate adjustment imperative.
Sheikh highlighted that, based on the government’s own data, inflation stood at a mere 1.5 percent in February 2025 and 2.4 percent in January. Despite this, the policy rate remains at an excessively high 12.0 percent, creating an unjustified premium of 1,050 basis points relative to core inflation. This disparity, FPCCI believes, is stifling economic activity and hampering industrial growth.
After comprehensive consultations with stakeholders across all key industries and sectors, FPCCI has reiterated its urgent demand for a decisive and one-time interest rate cut of 500 basis points in the upcoming MPC meeting scheduled for March 10, 2025. The organization asserts that such a move would align the monetary policy with the strategic objectives of the Special Investment Facilitation Council (SIFC) and the Prime Minister’s vision for accelerating economic growth and export expansion.
FPCCI President further noted that core inflation is expected to remain within the range of 1–3 percent in Q4 FY25 (April–June 2025), driven by declining prices and easing inflationary pressures. Additionally, international oil prices are projected to stay stable in the foreseeable future, with sufficient supply in global and regional markets. The Organization of the Petroleum Exporting Countries (OPEC) and its allies have adequate spare capacity to maintain oil prices within the lower-$70-per-barrel range, mitigating inflationary risks for Pakistan.
Given these favorable conditions, FPCCI insists that Pakistan’s policymakers must act decisively to slash interest rates and abandon contractionary monetary policies that are detrimental to business and industrial growth. Sheikh emphasized that the cost and ease of doing business, as well as access to finance, remain major concerns for Pakistan’s exporters, particularly when compared to competitors in the global market. The continued downward trend in inflation presents an opportunity for the government to adopt pro-business reforms that would help revitalize economic growth.
Saquib Fayyaz Magoon, Senior Vice President of FPCCI, further stressed the need to bring interest rates down to single digits. He argued that lowering the cost of capital would enhance the competitiveness of Pakistani exporters in both regional and international markets. He also urged the government to fulfill its promise of rationalizing electricity tariffs for industries, a measure that, coupled with a substantial rate cut, could significantly boost Pakistan’s economic prospects.
FPCCI remains steadfast in its advocacy for a more business-friendly economic environment and calls upon the government to take immediate and bold steps to stimulate investment, production, and exports through a meaningful reduction in interest rates.
