KARACHI: The Pakistan Businesses Forum (PBF) on Thursday rejected the State Bank of Pakistan’s (SBP) decision of increasing the interest rate once again by 125 bps to 15 percent, highest ever in the recent history of the country.
PBF Senior Vice President, Muhammad Riaz Khattak said the business community was expecting a reduction in the interest rate as it was a consensus recommendation by us that monetary policy should be eased to control adverse effects of recession.
He said the upward revision in lending rate would translate in multiplying high inflation and increasing the cost of production that would further paralyse the already numb industries.
The PBF SVP said the SBP move could further hit hard the overall economy as the availability of money to the business community had been made more expensive now after the new jump in discount rate.
Khattak said SBP should cut policy rates to spur growth, as cut would infuse confidence in the business community and propel economy which was hostage to the past policy of austerity.
He also complained that lending to private sector by the commercial banks during the current fiscal year has not picked up pace, adding that the decision would neither help curtail fiscal deficit nor control inflation as it had not served the purpose in the past, rather it would create troubles for the investors.
PBF official said that in the name of reducing inflation the SBP policy measures will generate more inflation. As a consequence of these steps inflation will not decrease but it will increase further.
“The previous mark-up rate of 13.75 percent prevailing in Pakistan was also considerably higher than other economies in the region.
Copyright Business Recorder, 2022