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Atif Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) addressing the Confederation of Asia-Pacific Chambers of Commerce & Industry (CACCI) conference. — Facebook@atifikramsheikh/File
#Business #leaders #disappointed #100bps #cut
KARACHI: The business community has described the Central Bank in the policy rate of 100 points (BPS) as less than expectations, despite a significant decline in inflation, they say, justifying a significant reduction.
The Financial Policy Committee of the State Bank of Pakistan (SBP) reduced the policy rate to 100 BPS, which is effective from May 6, 2025. While the move has been welcomed, especially low electricity -powered inflation has dropped rapidly and has been seen inadequate in food prices, which has been viewed inadequate.
The business, industrial and commercial sectors are disappointed with monetary policy, which maintains a high premium against consumer Price Index (CPI), said Atif Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). The SBP’s decision was less than the Business Community’s proposed 500bps kit.
Sheikh pointed out that according to government data, the CPI is only 0.3 % in April 2025, yet the policy rate is 11 %. “It reflects a premium of 1,070 points compared to inflation, which has no economic meaning,” he said. He explained that the FPCCI has demanded a 500bps deduction in a single step in the Monetary Policy Committee (MPC) meeting of Monday to meet the Special Investment Facility Council (SIFC) and the Prime Minister’s policy rate with the Prime Minister’s goals for industrial development, alternatives to import and export.
Sheikh noted that the CPI will be between 0 and 3 % during May and June 2025. Therefore, he argued that the key rate of policy for the meaningful support of economic growth should have been reduced by 7.0 %. He also highlighted that international oil prices have been predicted to reduce or stable in the coming months, which is an important factor in controlling inflation.
Karachi Chamber of Commerce and Industry (KCCI) President Mohammad Judge Bulani has termed the SBP decision as a positive but inadequate move towards economic recovery. Bulani emphasized that the cut is less than the expectations of the business community, which has long demanded interest rates of single digits.
Ahmed Azim Alvi, president of the Site Association of Industry, also expressed disappointment, and reaffirmed the demands of deep deductions. “The rate of policy of a digit has been our long -standing demand, but it seems that the business community is failing to understand its importance to the government,” he said.
Sheikh Amir Rehan, chairperson of the Pakistan Wanaspati Manufacturers Association (PVMA), welcomed the reduction of 100 BPS but warned that when it offers some relief, it is insufficient to strengthen and resurrect Pakistan’s industrial sector.
Sheikh Mohammed Tehsin, president of the Federal B Area Association of Trade and Industries (FBATI), emphasized that policy rate should be reduced to one digit to improve the competitiveness of the export sector and to strengthen foreign exchange. He added that low rates will also increase local production, increase domestic business, generate public tax revenue and create jobs.
Although the decline is not better than anything, it is unlikely to encourage industries to achieve bank financing for productive growth, said Masood Pros, president of the site Super Highway Association (SSHI) (SSHI).
Meanwhile, Ahmed Chennai, chairperson of the Pakistan Cloth Merchants Association (PCMA) and the director of the Pakistan Stock Exchange, issued a statement to strengthen the business community’s position. Recognizing the latest SBP cut, Chennai said it was less than expectations. “We expected more aggressive deduction up to about 9.0 percent, which will significantly reduce the borrowing costs, promote the private sector’s credit increase, and provide strong support to our manufacturing and export sectors,” he said.
Chennai noted that although the reduction in 100 BPS could reduce the cost of finances to a slight extent, it would not be enough to catalyst the investment and consumption needed for strong maintenance. He reaffirmed the demand for further reduction in the business community’s upcoming MPC meetings, clear guidance by SBP to enable the trust business planning, and complementary financial and structural reforms to enhance the impact of financial softening. “” [PCMA] And is ready to work with the broader business community [SBP] And other stakeholders are to create a policy environment that effectively solve the current challenges and attract Pakistan to a sustainable economic recovery.
