APTMA urges MPC to reduce policy rate by 500 basis points

ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has urged the Monetary Policy Committee (MPC) of State Bank of Pakistan (SBP) to take decisive action to stimulate economic growth by reducing the policy rate by 500 basis points in one go in its upcoming meeting on Monday (tomorrow).

The textile mills representative body is of the view that this step is critical for addressing the pressing challenges faced by the economy.

“We emphasize that a substantial reduction in the policy rate would have far-reaching benefits. It would lower borrowing costs, bring bank mark-up rates back to single digits, and make credit more affordable for businesses and consumers. This, in turn, would encourage investment, increase industrial production, and create a positive momentum for economic growth,” APTMA said in a press release.

It says that Pakistan’s economy needs immediate support through pro-growth measures, and a significant reduction in the policy rate is the need of the hour. The Consumer Price Index (CPI) for November 2024 has dropped to 4.9% year-on-year, a marked improvement from 7.2% in October 2024. This declining trend in inflation provides a strong basis for monetary easing.

“Delaying such a move will result in unnecessary economic losses, especially at a time when the government is also looking to bring interest rates back to single digits. A timely reduction would strengthen investor confidence, improve economic stability, and demonstrate the effectiveness of recent policy measures,” APTMA maintained.

The Association has also appreciated efforts of Pakistan’s economic planners and the resilience of the business community, which has contributed to the recent reduction in inflation and other economic gains and reaffirm our commitment to supporting policies that foster growth and stability while ensuring the prosperity of Pakistan’s people and industries.

“We stand ready to work closely with the government and other stakeholders to sustain and build upon these achievements. A decisive step now will pave the way for a stronger, more vibrant economy,” the Association concluded.

Copyright Business Recorder, 2024