LCCI for another policy rate cut

LAHORE: Lahore Chamber of Commerce and Industry (LCCI) has urged State Bank of Pakistan to make another 150-200 basis points cut in policy rate in the third monetary policy, likely to be announced on November 30.

Further cut in the policy rate would help revive businesses, overcome low-growth scenario and would encourage new investments besides giving a jumpstart to the sluggish economy, LCCI President, Irfan Qaiser Sheikh said in a statement on Saturday.

He said the availability of cheaper money to the business doing people is a must to expedite the process of industrialisation that would ultimately result in much-needed job creation. He said that 150 basis point cut made after a long period of eight years by the State Bank of Pakistan in previous bimonthly monetary policy was quite encouraging but still the interest rate needs to be brought to single digit.

The ongoing economic scenario shows that there is hardly any time left for economic managers of the country to help stop industrial closures and defaults. Therefore, the people sitting at the helm of affairs in the government and SBP should understand well that a 50 basis point cut will be too little to do any favour to the business community, he said.

LCCI President said that the economic meltdown in recent years has already proved that high policy rate had caused a great harm to economy and would continue to widen the fiscal deficit unless and until a realistic approach towards this very important area is adopted. He said that all the major economies despite having higher inflation rates have either curtailed or are in the process of reducing interest rates to protect their respective economies.

In the United Kingdom, the inflation is around 4.5 percent while the government, despite poor health of its economy, is not making any change in its interest rate that is 0.5 percent. He said that in USA, the rate is 0.25 percent and in Eurozone it is 1.5 percent, he added.

Sheikh said that SBP should understand that its continued tighter stance is inflicting a very heavy loss on the nation as the economy has already paid a very high price because of high interest rate.