Karachi: The business world expressed the disappointment of the decision of the State Bank of Pakistan (SBP) to maintain the policy rate at 11%on Monday, warning that this decision will hinder economic activity and industrial resumption.
Atif Ikram Sheikh, President of the Federation of Chambers of Commerce and Industry (FPCCI), said that the commercial, industrial and commercial sectors are dismayed that monetary policy continues to transport an important premium compared to the consumer price index (ICC), without reducing the key rate announced during the Monetary Bank’s monetary policy meeting on Monday.
Citing government data, he noted that inflation fell 3.5% in May 2025, but the policy rate remains at 11%, reflecting a premium of 750 basis (BPS) compared to inflation. “It has no economic sense,” said Sheikh.
He explained that following consultations with stakeholders in all sectors, the FPCCI had urged a single rate drop of 400 bp, aligning the key rate on the vision of the Special Investment Facilitation Council (SIFC) and the Prime Minister’s agenda for industrial growth, import substitution and exports.
Sheikh added that the IPC should remain between 2.0% and 4.0% in June and July, strengthening the need to reduce the policy rate to 7.0%. “The cost and the ease of doing business, as well as access to finances, remain of a serious weakness compared to our export competitors. Inflation tends to drop for months, and the only viable path to economic recovery is to support industry and exports, “he said.
The president of the Karachi Chamber of Commerce and Industry (KCCI) Muhammad Jawed Bilwani also criticized the decision of the SBP, describing it as too prudent and counterproductive, in particular in the midst of inflation and the decline in industrial competitiveness.
“The business world hoped for a long -standing reduction to a single figure to stimulate the economy, reduce business costs and support industries in difficulty.
Bilwani stressed that inflation clearly made a background, independent forecasts placing it at 6-7% for financial year 26, while the IMF and the government are both waiting 7.5%. He argued that the decision of the SBP, on the basis of the increase in inflation from May to 3.5%, was unjustified given the relatively low rate and the sufficient place for monetary relaxation.
“High interest rates have rendered Pakistan’s industrial rates, exporters losing international field and national manufacturers fighting against cheaper imports. A drop in rate would have provided critical breathing space for the Renaissance and the creation of jobs,” he added.
While recognizing external challenges such as the Iran-Israel conflict and the rise in oil prices, Bilwani stressed that the penalty of local businesses is not the answer. “Yes, external risks exist, but monetary policy should find a balance. With the budgetary tightening already underway and a federal contraction budget, there was a space for monetary support,” he said.
“Today’s decision signals a hesitation at a time when daring and pro-growth action is necessary. We urge the central bank to show foresight and empathy towards the productive sectors. Pakistan can no longer afford to remove its growth potential. ”
The Korangi Commerce and Industry Association (KATI) also weighed, calling for the decision to hold the rate of 11% “temporarily acceptable” given the dominant global and regional uncertainties.
The president of Kati, Junaid Naqi, cited geopolitical tensions, including the Iran-Israeli conflict, and the peak of oil prices and commercial disturbances. These factors, he noted, require a degree of prudence in the development of policies. However, Naqi argued that interior indicators support a drop in interest rates. “Inflation fell at only 3.5% in May-the lowest in the world. Globally, central banks reduce rates when inflation falls to stimulate investment, but Pakistan has not yet followed up,” he said.
He reiterated constant demand from the business world for a policy rate to a figure to reduce production costs and increase the competitiveness of exports. “Given the current challenges, the business world supports the larger government agenda. But we also expect friendly reforms once the situation is stabilized. ” Naqi also warned that the recent increase in fuel prices would more affect the industrial sector by increasing production costs.
He stressed that the government set a target of GDP growth of 4.2% for financial year 26, but that it would require a favorable financial environment. “Once the global and regional conditions are improving, we urge the State Bank to reduce the policy rate by two to three percentage points at the next MPC meeting,” he said. “We recognize that today’s decision is shaped by global factors,” concluded Naqi, “but we hope that pro-industrial reforms will soon follow to guarantee that the economy of Pakistan is increasing towards sustainable growth.”
