KARACHI: A monetary policy survey conducted recently by Policy Research Unit (PRU), Policy Advisory Board Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended a reduction in policy rate by 50-100 bps.

This survey was conducted prior to Monetary Policy Committee (MPC) meeting of State Bank of Pakistan (SBP) scheduled later in this month. The survey results show that 84% of the businessmen and researchers in monetary policy suggest that there should be no increase in the policy rate and nearly half of them suggest a cut between 50-100 bps.

A policy brief issued on the occasion noted with a sigh of relief that the core inflation in Pakistan – the most definitive indicator for setting up the policy rate for any central bank – has significantly subsided to 6.3% in August 2021 as compared to 6.9% in July 2021.

Mian Nasser Hyatt Maggo, President FPCCI, has said that the policy interest rate must not be over 6% and if SBP wants to promote business activities and economic growth in the country, it should be brought down to 5%. He also pointed out that the policy interest rate in the region is 3-4% only and we have to compete with the region. FPCCI has recently established Policy Advisory Board under the chairmanship of former Federal Secretary Mohammad Younus Dagha. It aims at to provide research-based expert input for policy advocacy, ease of doing business initiatives and formalizing the business community’s inputs on policies to various governmental departments, institutions and departments.—PR

Copyright Business Recorder, 2021