Business leaders criticise SBP’s ‘insufficient’ 100bps cut

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KARACHI: The business community has expressed strong disappointment over the decision to reduce the policy rate by only 1 percent on the decision of the State Bank of Pakistan (SBP), and “tackle economic challenges or the country’s growth.” Inadequate to lock. “

Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has criticized the monetary policy, saying it imposes excessive premiums in comparison to basic inflation. “Pakistan’s business, industry and commercial community are deeply disappointed with monetary policy, as the SBP announced a very inadequate reduction of 100 points (BPS) on Monday,” he said.

He pointed out that according to official data, inflation is 4.1 percent in December 2024, while the policy rate is 12 percent, which reflects the amazing premium of 790 twenty points than basic inflation. “[The] Sheikh added. .

He further explained that international oil prices are expected to be relatively stable, which ease inflation pressure. “The Pakistani authorities had all the conditions for announcing a meaningful deduction at a meaningful rate, but they have chosen to remain with their reactionary, contradictory, content and anti -business monetary policy,” he said.

Karachi Chamber of Commerce and Industry (KCCI) President Mohammad Judge Bulani echoed similar sentiments, expressing frustration over the reduction of 100bps in the policy rate. He argued that the decision showed a lack of urgency in tackling the important financial and economic challenges facing businesses, especially small and medium -sized businesses (SMEs).

“Despite the Prime Minister’s assurances to reduce interest rates, the SBP has kept it 12 percent, which has surprised the business community,” Bulani said. Businesses are struggling with extraordinary input costs, including rising energy prices, fuel prices, raw material costs and unstable exchange rates, he said.

Bilani emphasized that high interest rates increase the financial burden on businesses, making it almost impossible for them to access the cheaper credit for working capital and extension.

“The nominal deduction is failing to provide aid, whose business community works very little to create a conducive environment for economic recovery and works very little,” he said. He added that a meaningful reduction in the policy rate may have sent a strong indication to both domestic and international investors that Pakistan is committed to promoting a business friendly environment. “Instead, minor adjustments reflect an overwhelming way that reduces the economic stagnation,” said Bulani.

The President of the KCCI also highlighted that the country’s policy rate is significantly higher than its regional counterparts, which has caused competitive damage to local businesses. He explained that high interest rates discourage investment in the production sectors and investors pushes the property to the markets of non -immovable and foreign exchange, which further pressures the economy. –

He added that the shortage of cheap credit has especially affected export -based industries, which are important to overcome the balance of Pakistan’s payment crisis. Ahmad Azim Alvi, president of the Site Association of Industry (SAI), called the reduction of 100bps in interest rates a “major obstacle to economic recovery.”

He expressed concern over the failure to introduce a higher cut in the SBP rate, despite the decline in inflation and gradual improvement in the country’s economic indicators.

Likewise, Junaid Naqi, president of the Korangi Association of Trade and Industry (KA), criticized the decision to maintain the SBP policy rate 12 %. He said that financial policy is less than expectations, especially in view of the challenging economic conditions facing the country.