KARACHI: Business leaders and economists have criticized the State Bank of Pakistan’s (SBP) decision for maintaining the policy interest rate at an excessively higher level of 11 percent, arguing it hinders economic growth and exacerbates business struggles and warning that the move will hamper economic activity and industrial recovery.
The decision has sparked frustration among the business community, which had widely anticipated a significant rate cut to single digits in order to spur economic revival.
Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has strongly criticized the State Bank of Pakistan’s decision to maintain the policy interest rate at 11%, calling it “anti-growth” in light of the current economic conditions. Sheikh expressed deep concerns over the adverse impact of this decision on the business sentiment and the broader economy.
He emphasized that, given the prevailing inflation rates, the policy interest rate should ideally be reduced to 7% to align with economic realities and foster growth. He highlighted that a reduction in the interest rate could have led to a significant decrease in the government’s debt burden by approximately PKR. 3,500 billion – providing much-needed fiscal relief.
Atif Ikram Sheikh highlighted that inflation has come down to 5.6% in the month of September 2025 as per the government’s own statistics. “Pakistan’s interest rate is significantly higher than those in other countries in the region,” Sheikh noted, pointing out that the elevated rate stifles economic activity and discourages investment. He stressed that for businesses to thrive and remain competitive, the policy rate must be brought down to a single-digit figure.
Saquib Fayyaz Magoon, SVP FPCCI, underscored that maintaining high interest rates directly impacts production costs, which in turn fuels inflation. “A single-digit interest rate would lower production costs, making goods and services more affordable and ultimately contributing to a reduction in inflation,” he explained. He further noted that high interest rates restrict access to finance, hampering economic activity and growth.
He referenced assurances from Federal Finance Minister Muhammad Aurangzeb, who had previously indicated that a reduction in the policy rate was forthcoming in the coming months. The decision to maintain the status quo, therefore, comes as a setback to the business community’s expectations.
Abdul Mohamin Khan, VP & Regional Chairman Sindh, FPCCI warned that keeping the interest rate unchanged will severely undermine the business environment, discourage investment and hinder economic recovery. He urged the State Bank to reconsider its stance and adopt measures that support businesses, reduce borrowing costs and stimulate economic growth.
Abdul Mohamin Khan added that the business community is the backbone of Pakistan’s economy, stated. “A conducive monetary policy with a single-digit interest rate is essential to boost industrial output, create jobs and stabilize prices. We call on the State Bank to take immediate action to address these concerns and align its policies with the needs of the economy.
President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Rehan Hanif has expressed deep disappointment over the State Bank of Pakistan’s decision to keep the benchmark interest rate unchanged at 11 percent, calling it a missed opportunity to provide much-needed relief to the business and industrial community.
Copyright Business Recorder, 2025
Comments
Comments are closed for this article.