LAHORE: Lahore Chamber of Commerce and Industry (LCCI) on Wednesday said that at least 300 basis point cut in policy rate is direly needed to jumpstart the trade and economic activities in the country, since the existing 9.50 policy rate is not compatible with the inflation rate.
LCCI President Ijaz A. Mumtaz said here that existing 3.96 percent inflation rate was the lowest rate since October 2003 but in the last monetary policy, State Bank of Pakistan announced only 0.5 percent cut in the policy rate that had never done any service to the economy and the industry.
Citing an overview, the LCCI President said that in China policy rate was 5.60 percent, India 8 percent, Bangladesh 7.25 percent, Sri Lanka 6.50 percent, Singapore 0.12 percent and Thailand 2 percent.
Ijaz A. Mumtaz said that high policy rate was one of the biggest reasons of high input cost of the industrial sector. Resultantly, Pakistani merchandise facing hard competition in the internal market. Present economic scenario, he added, the industry and economy needed a minimum 3 percent cut in the discount rates, which were no more sustainable and causing a great harm to economy.
He said that despite higher inflation, all the major economies had either curtailed or were in the process of reducing high interest rates to protect their economies, while countries like Japan and Sweden were maintaining discount rate at zero.
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