Business circles disappointed over SBP rate pause

• Call for a cut in next MPC meeting to support industrial recovery
• OICCI, PBC term SBP decision ‘balanced, prudent’

KARACHI: The business community on Monday expressed disappointment over the State Bank’s decision to keep the policy rate unchanged at 11.5pc, urging monetary easing to support growth, exports and investment amid easing inflation expectations.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh said that a static policy rate in double digits is highly detrimental to the country’s economic survival, adding that failure to ease borrowing costs would accelerate de-industrialisation and severely undermine export targets, which are critical for earning foreign exchange.

Expressing concern over what he termed a disconnect between the central bank and the challenges faced by trade and industry, he said the decision to hold the policy rate was unfortunate despite expectations of a downward trend in inflation following the announcement of a US-Iran peace deal facilitated by Pakistan and gradual normalisation of global energy supplies.

Amid a cost-of-doing-business crisis across the manufacturing sector, he said the SBP’s overly cautious and contractionary stance was starving the private sector of essential capital. “The economy cannot transition to a growth model without a rationalised, single-digit interest rate aligned with domestic realities and the vision of the Special Investment Facilitation Council,” he added.

FPCCI Senior Vice President Saquib Fayyaz Magoon said regional competitors were operating with significantly lower borrowing costs, rendering Pakistani exports uncompetitive in global markets. Maintaining the status quo, he added, would further penalise both SMEs and large-scale manufacturing, effectively stalling capacity expansion and job creation.

FPCCI Vice President Abdul Mohamin Khan said the status quo in the policy rate was not a sign of stability but a recipe for stagnation.

The apex body urged the government and the SBP governor to immediately reconsider this approach and implement a decisive rate cut in the next Monetary Policy Committee meeting, bringing the rate into single digits.

Acting President of the Karachi Chamber of Commerce and Industry said the business community had strongly expected a reversal of the previous 100-basis-point increase and a reduction to single digits, given improving economic indicators and easing global uncertainties. He stressed that monetary policy should align with the broader objective of promoting industrialisation, enhancing exports, and ensuring higher economic growth.

Korangi Association of Trade and Industry President Muhammad Ikram Rajput said that under current economic conditions, a reduction in the interest rate was essential to support business activity, industrial recovery, investment growth, and especially the development of the SME sector.

He said the decision could further intensify challenges for industry, adding that the business community had expected a more accommodative monetary stance in view of relatively easing inflation and improving economic stability.

‘Balanced, pragmatic approach’

On the other hand, Secretary General/Chief Executive of the Overseas Investors Chamber of Commerce and Industry (OICCI) M. Abdul Aleem described the SBP decision as a “balanced and pragmatic approach,” noting that it allows the central bank to assess the impact of earlier measures while avoiding additional pressure on business borrowing costs and investment planning.

However, he stressed that stability in the policy rate must be accompanied by fiscal discipline, predictable taxation, stronger external buffers, improved energy-sector governance, and faster ease-of-doing-business reforms to translate macroeconomic stability into sustainable, private-sector-led growth.

Pakistan Business Council Chairperson Dr Zeelaf Munir said the PBC considers the decision to keep the policy rate unchanged a prudent response to prevailing inflation trends and associated risks.

Published in Dawn, June 16th, 2026 ...