KARACHI: Bon Qasim Association of Trade and Industry (BQATI) has called on the Monetary Policy Committee (MPC) to urgently reduce interest rates by at least 400 basis points at its upcoming November 4th meeting, highlighting the critical misalignment between the current policy rate and Pakistan’s significantly reduced inflation.
Despite inflation dropping to 6.9% in September 2024, the policy rate remains at a burdensome 17.5%, resulting in an unsustainable real interest rate of 10.6%. This disparity is exerting severe pressure on the industrial sector, which faces barriers to affordable financing essential for maintaining operations, securing working capital, and investing in future growth. With inflation consistently declining since early 2024, maintaining such high rates fails to reflect the country’s economic realities and imposes undue costs on industries essential for economic recovery.
The industrial sector is particularly affected by these high borrowing costs. Without access to affordable financing, key sectors are unable to expand, innovate, or effectively compete, placing the country’s broader economic growth and employment level at risk.
BQATI urges that a substantial rate reduction is essential to realign monetary policy with the current inflationary environment, enhance industrial productivity, strengthen export competitiveness, and safeguard millions of jobs critical to Pakistan’s economic future.
Copyright Business Recorder, 2024
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