LCCI says 250-300 bps cut in policy rate direly needed

RECORDER REPORT

LAHORE: The Lahore Chamber of Commerce and Industry said that 250 to 300 basis points cut in policy rate is direly needed for the jumpstart of the economy which is at standstill.

LCCI President Irfan Qaiser said in a statement the cut in the policy rate would also help revive the industry, and added that a cut of 50 to 100 basis points would not be doing any service to the dwindling economy. "It is very unfortunate that we have failed to learn any lesson from the tighter monetary policy stance adopted by the State bank of Pakistan in the past years."

While appreciating Defence Minister Ahmad Mukhtar's stance for a drastic cut in interest rate, he said the Lahore Chamber of Commerce and Industry acknowledges the services of Ahmad Mukhtar because during his tenure as Federal Commerce Minister he had managed a visible cut in markup rates.

The LCCI President said that the ongoing economic scenario shows that there is hardly any time left for economic managers of the country and they all should understand well that a 50 to 100 basis points cut would be too little. "It is now before all of us that high discount rate is no more sustainable. It has been causing great harm to economy and would continue to do so unless and until a realistic approach is adopted," he added.

Irfan said that despite higher inflation all major economies have either curtailed or are in the process of reducing high interest rates to protect their economies. In the United Kingdom, inflation is around 4.5 percent while the government, despite poor health of its economy, is not making any change in its interest rate that is 0.5 percent. He said that in USA, the rate is 0.25 percent and in euro zone it is 1.5 percent.

He said that the State Bank of Pakistan should understand that its continued tighter stance is inflicting a very heavy loss on the nation as the economy has already paid a very high price because of high interest rate.

The LCCI president said that he, in his one-to-one meeting with Prime Minister Yousaf Raza Gilani on Thursday had requested him to help in bringing down the highest ever interest rates in the country if the present government was interested in seeing industrialisation in the country. He said that the Prime Minister had assured him that while evolving all future economic policies, the private sector in general and the chambers of commerce in particular would be taken on board.