Business leaders criticise central bank’s ‘anti-growth’ decision

KARACHI: The business community and industrial sector on Monday expressed disappointment over the State Bank of Pakistan’s (SBP) decision to maintain the policy rate at 11 per cent, calling it “anti-growth” and damaging to business sentiment.

Atif Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the decision fails to reflect current economic realities and warned that it would dampen investment and economic activity.

He argued that, with inflation easing to 5.6 per cent in September 2025 according to official data, the policy rate should ideally be reduced to around 7.0 per cent to stimulate growth. Sheikh added that such a move could have cut the government’s debt burden by approximately Rs3.5 trillion, providing vital fiscal space.

“Pakistan’s interest rate remains significantly higher than those in other countries in the region,” Sheikh noted, stressing that high borrowing costs were stifling economic momentum. He urged policymakers to bring the policy rate down to a single-digit level to support business competitiveness.

Muhammad Rehan Hanif, president of the Karachi Chamber of Commerce and Industry (KCCI), also voiced frustration over the SBP’s decision, describing it as a missed opportunity to provide relief to the business and industrial sectors.

“Given that inflation is largely under control, the business community was expecting at least a 200-basis-point reduction to bring the rate down to around 9.0 per cent,” Hanif said. “Even if a reduction to 9.0 per cent was not feasible, a cut to at least 10 per cent should have been announced.”

He noted that while the situation has improved since the record-high policy rate of 23 per cent, the current level remains burdensome for businesses facing rising energy and operational costs. Hanif recalled that the government had pledged to bring the interest rate down to single digits by the end of 2024 — a commitment yet to be honoured.

“The private sector, already struggling with soaring gas and electricity tariffs, cannot sustain such high borrowing costs,” he said. “If the government truly aims to revive industrial activity, create jobs and boost exports, it must urgently reduce both interest rates and utility costs.”

Muhammad Ikram Rajput, president of the Korangi Association of Trade and Industry (KATI), also expressed disappointment, noting that this was the fourth consecutive Monetary Policy Committee (MPC) meeting in which the policy rate was left unchanged.

President of the SITE Association of Industry Ahmed Azeem Alvi criticised the central bank for once again ignoring repeated appeals from the business community to bring rates down to single digits, warning of deepening concerns among industrial stakeholders.

Salim Valimuhammad, chairperson of the Pakistan Chemicals and Dyes Merchants Association (PCDMA), said maintaining the policy rate at 11 per cent was a major setback for the business community and a blow to economic recovery efforts.