Business community strongly reacts to SBP’s policy rate decision
KARACHI: Business and industrial community has expressed “sharp disappointment and frustration” over the State Bank of Pakistan’s decision to keep the key policy rate unchanged at 11.5 percent.
They expressed disappointment over the status quo in monetary policy, saying high interest rates remain a major obstacle to economic growth.
Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has expressed his disappointment over the State Bank of Pakistan’s decision to keep the policy rate unchanged at 11.5 percent while trade and industry is in dire need of some breathing space.
The apex trade body has termed the decision as highly contractionary and counterproductive, warning that holding the benchmark interest rate at an “oppressive level” will continue to severely stifle economic activity and undermine industrial revival efforts across the country.
Monetary policy was the only potent tool left with the authorities at the moment to provide some facilitation, but it remained unutilized, he added.
AtifIkram Sheikh said that the business community had demanded a reduction in the policy rate to a single digit to help bring down the exorbitant cost of doing business.
He said that the central bank’s overly cautious approach directly contradicts current economic realities and denies much needed support to trade and industry as the trade deficit has climbed by 18.1 percent in July-August 2026 on a year-on-year basis.
Korangi Association of Trade and Industry (KATI) President Muhammad Ikram Rajput has expressed concern over the State Bank of Pakistan’s decision to maintain the policy rate at 11.5 percent, saying that high interest rates are slowing the recovery of industrial activity, new investment and the export sector.
Muhammad Ikram Rajput said that geopolitical tensions in the Middle East, concerns over a possible increase in global crude oil prices and external economic uncertainty remained important factors. However, domestic industries were also facing serious challenges, including rising production costs, high electricity and gas tariffs, and continued fluctuations in petroleum product prices.
He said further monetary easing and a gradual reduction in the policy rate were urgently needed under the prevailing business conditions. The State Bank should provide a clear and actionable roadmap for bringing the policy rate into a single digit as global conditions improve, enabling industrialists to make effective investment and business plans for the future.
The KATI president said high interest rates had made borrowing increasingly expensive for the industrial sector, limiting prospects for establishing new industries, expanding existing units, increasing production capacity and investing in modern technology. Expensive financing was also raising the cost of Pakistani products and undermining their competitiveness in international markets.
He said small- and medium-sized enterprises (SMEs) were among the sectors most severely affected by high interest rates.
The lack of affordable financing was adversely affecting their expansion plans, employment generation and production capacity.
Muhammad Ikram Rajput demanded that the State Bank ensure easy access to loans at preferential rates for SMEs, export-oriented industries and the manufacturing sector.
He said monetary policy should give equal priority to controlling inflation and promoting industrial growth, investment, exports and employment.
He said a business-friendly interest rate environment was essential to restore private-sector confidence, stimulate investment and accelerate industrial activity, which was crucial for sustainable economic growth and increasing exports.
Copyright Business Recorder, 2026