KARACHI:
Business leaders have called for a 6% cut (600 basis points) in the interest rate in one go to accelerate economic growth and activity.
The current interest rate stands at 12%, while inflation is declining, according to government claims. The State Bank of Pakistan (SBP)’s Monetary Policy Committee (MPC) is scheduled to meet on March 10 to review the interest rate.
Business leaders have stressed that the government must reduce interest rates to 6% immediately for the next five years and introduce an amnesty scheme to rejuvenate the construction industry. They also urged the introduction of attractive loan schemes to support struggling Small and Medium-sized Enterprises (SMEs).
Renowned industrialist and exporter from Balochistan, Ismail Suttar, stated, “The best parameter for interest rate reduction or increase is to keep a close eye on inflation over the past three months. Inflation in Pakistan has been at its lowest, so why have we not adjusted the interest rate accordingly? Are we being overly cautious, or do we not want our economy to grow? If we are being cautious, we should still reduce rates by at least 150 to 200 basis points in one go so that the economy can respond positively.”
Federal B Area Association of Trade and Industry, Karachi (FBATI) President Shaikh Muhammad Tehseen urged the SBP to lower the policy rate to a single digit on a long-term basis to encourage industries to utilise financing from commercial banks.
“The low interest rates will encourage industrialists to expand their businesses through bank financing, ultimately boosting exports and local production. This will in the growth of economic dividends through the generation of new jobs for citizens and additional tax revenues for the government,” he stated.
He added that SMEs are the backbone of the economy, and if they are facilitated with an incentivised financing scheme, economic growth will be imminent within the next few months.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh said that after deliberations across all industries and sectors, the FPCCI demands an immediate and single-stroke rate cut of 500 basis points in the upcoming MPC meeting. This, he said, would help rationalise the monetary policy and align it with the vision of the Special Investment Facilitation Council (SIFC) and the prime minister’s economic growth and export strategy. The business community remains dissatisfied with the monetary policy, arguing that it continues to impose an excessively high premium compared to core inflation. The SBP’s last MPC meeting on January 27 announced a mere 100-basis-point cut, which they deemed grossly insufficient.
Sheikh pointed out that inflation is at a nine-year low in the country. “According to the government’s own statistics, inflation stood at 1.5% in February 2025 and 2.4% in January. Yet, the policy rate remains at 12%, reflecting a premium of 1,050 basis points compared to core inflation,” he said. Moreover, he highlighted that Pakistan’s cost of doing business, ease of doing business, and access to finance are at the lowest levels compared to its competitors in export markets.
“Fortunately, the decisive downward trend in inflationary pressures has continued for the past several months. The only viable solution to get back on an economic growth trajectory is to support industry and exports,” Sheikh stressed.
