Karachi, May 5, 2025 – The Karachi Chamber of Commerce and Industry (KCCI) has voiced strong dissatisfaction over the State Bank of Pakistan’s (SBP) decision to cut the benchmark policy rate by a mere 1%, reducing it from 12% to 11%.
While acknowledging the move as a step in the right direction, the KCCI labeled it as insufficient to address the broader economic challenges faced by Pakistan’s business community.
KCCI President Muhammad Jawed Bilwani, in a statement issued on Monday, termed the reduction in the policy rate as a “symbolic gesture” rather than a bold initiative. He emphasized that the business sector had long been urging the SBP for a substantial policy rate cut to bring borrowing costs into the single digits — a demand rooted in the need to stimulate economic activity, encourage investment, and support industrial growth.
Bilwani pointed to the sharp decline in inflation, citing Pakistan Bureau of Statistics data that showed consumer price inflation had fallen to just 0.3% in April 2025 from 0.7% in March. He argued that the prevailing real interest rate — which remains alarmingly high — is acting as a drag on investment, production, and job creation in Pakistan.
Highlighting regional comparisons, he noted that Pakistan’s policy rate is significantly higher than in neighboring economies with similar or even higher inflation. “India’s policy rate stands at 6.0%, Bangladesh at 10.0%, Vietnam at 3.0%, and Thailand has recently slashed its rate to 1.75%. These countries are prioritizing industrial competitiveness. In contrast, Pakistani businesses remain burdened with unsustainable financing costs,” he added.
KCCI warned that small and medium enterprises (SMEs), already struggling to survive, are disproportionately impacted by the current policy stance. “These high borrowing rates directly affect exporters and SMEs, eroding global competitiveness,” Bilwani stressed.
Reaffirming the chamber’s position, he concluded, “KCCI continues to demand a single-digit policy rate. We urge policymakers to engage in meaningful dialogue to realign monetary policy with Pakistan’s urgent economic realities and support sustainable growth.”