Businesspeople say any hike in policy rate to hit businesses

PESHAWAR: Members of the business community while highlighting the potential impacts of lowering the key policy rate on economic growth, expressed fear the likely surge in interest rate by the State Bank of Pakistan, would push business and industrial activities to further downward and may also generate high risk of job loss and jeopardize the ongoing efforts to put the national economy on a path of stability, prosperity and progress.

Businessmen attached with diverse sectors while commenting on the current state of the economic conditions ahead of the SBP’s key monetary policy meeting, being scheduled on Monday, stated that the business community fully acknowledges the State Bank of Pakistan commitment to maintaining macroeconomic stability.

However, they observed Pakistan is currently experiencing cost-push inflation rather than demand-pull inflation.

The business community stressed it is highly imminent to keep the interest rate at 11.5 percent and avoid harshness in the monetary policy while keeping in view the prevailing scenario.

Traders noted that in September 2026, the inflation ratio remained 10.26 percent, while annual increase in wholesale prices recorded at 13.33 percent, which is a clear indication of the pressure on the country’s inflation and cost of production.

The businessmen said the rising cost of transportation, the increased electricity and gas tariffs, supply chain disruptions arising from tension in the Middle East and food prices pressures were behind the major reason for the rising inflation.

President of the Sarhad Chamber of Commerce and Industry Malik Imran Ishaq while talking to this scribe said the business community acknowledges the State Bank’s efforts to safeguard macroeconomic stability.

SCCI chief stressed reduction in cost of production and improvement in supply chain imperative to control over the increasing pressure of inflation, created by the supply side. However, he said the business community believes that the current inflationary trend is primarily driven by fuel, energy and supply-side pressures rather than excessive domestic demand.

President Malik Imran Ishaq said the business community strongly believes that Pakistan cannot achieve sustainable industrial growth by fighting supply-side inflation with demand-side instruments alone.

The SCCI chief observed the SMEs sector was already confronted with difficulties due to working capital, trade-financing, and provision of loans at higher rates for procurement of machinery, and business expansion under tight conditions. He urged the central bank to ensure effective and workable access to finance to SME, import and provision of technology for SMEs.

He called for the provision of a business-friendly environment by making energy prices competitive, improvement in the taxation system, timely refunds of taxes, customs and facilities at the border region and removal of unnecessary regulatory hurdles.

Malik Imran Ishaq emphasized that the government and the central bank must ensure effective harmony in finance and monetary policies, and transparent information sharing regarding availability of loans to businesses and the industrial sector. He, furthermore, asserted the balance must be retained for control over the inflation and promotion of economic growth, and keeping the policy rate unchanged to boost the economic growth.

Copyright Business Recorder, 2026