KARACHI: APSEA calls on the Monetary Policy Committee (MPC) to urgently reduce interest rates by at least 400 basis points at its November 4th meeting, emphasizing the unprecedentedly high real interest rate that is placing severe pressure on Pakistan’s industrial sector.
Although inflation has sharply declined to 6.9% as of September 2024, the policy rate remains at an excessive 17.5%, resulting in a staggering real interest rate of 10.6%. This abnormally large gap is placing unsustainable financial burdens on industries that already face high energy and operational costs. Such a high real interest rate restricts access to necessary capital, limits working capital availability, and discourages investment critical for growth.
The impact of these high borrowing costs on the local industry is profound. With inflation now at manageable levels, the continued high policy rate reflects a misalignment with economic realities, stalling industrial expansion, innovation, and competitiveness.
Copyright Business Recorder, 2024
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