Industrialists and traders across Pakistan have voiced strong disappointment with the recent decision of the State Bank of Pakistan's Monetary Policy Committee to reduce the key policy rate by a marginal 50 basis points. Business leaders from Rawalpindi, Karachi, and other centers have collectively termed the reduction as 'too little, too late' to stimulate meaningful economic growth and industrial expansion.
RCCI: A Welcome but Inadequate Step
The Rawalpindi Chamber of Commerce and Industry has stated that while the cut is overdue, it falls critically short of what is needed to revive the economy. RCCI President Usman Shaukat argued that the business community was anticipating a substantial reduction that would bring the policy rate into single digits, ideally at 9% or below. He noted that the current marginal cut is ineffective in boosting local production, enhancing exports, or fostering overall industrial growth.
Shaukat stressed that Pakistan's economy urgently requires a more competitive and growth-oriented interest rate regime to attract both domestic and foreign investment. He recalled that in a previous MPC meeting, concerns about post-flood inflationary pressures were raised, which did not materialize. 'Given this, there was sufficient room for a deeper rate cut in the latest policy decision,' he added.
The RCCI president also referenced Finance Minister's address at the chamber on 14 August, where a commitment to lower rates was made. While partially fulfilled, Shaukat said the reduction is too small to aid businesses struggling with a high cost of capital. He expressed hope for a further cut of at least 200 basis points or more in the upcoming monetary policy meeting to support industrial revival and export-led growth.
Nationwide Echo: Calls for Single-Digit Rates
The sentiment is echoed by business leaders nationwide. S.M. Tanveer, an FPCCI leader and Patron-in-Chief of the United Business Group, welcomed the SBP's move but insisted more is needed. He urged the central bank to continue its efforts with a target of bringing the policy rate below 9% to provide relief and stimulate investment.
Similarly, Shaikh Muhammad Tehseen, President of the Federal B Area Association of Trade and Industry, demanded a drastic cut to a single-digit rate. He highlighted that Pakistan's policy rate remains higher than in regional and comparable economies, putting exporters at a significant disadvantage. 'The cost of doing business and production continues to increase in the country, which is depicting the closure and departure of foreign and local companies in Pakistan,' he pointed out. He called on the government to actively reduce production costs, including taxes and undue duties, alongside a lower policy rate.
Expert Analysis on Growth and Stability
Financial experts and entrepreneurs also weighed in on the decision. Ibrahim Amin, Chairman of Dellsons Associates, viewed the slight reduction as a cautious move by the government towards maintaining macroeconomic stability.
Tech entrepreneur Dr. Noman Ahmad emphasized the long-term necessity of a low interest rate environment. He stated that incentivized business expansion and affordable credit are essential to encourage growth in services and commodity exports. 'Lowering down interest rates will help tech companies and SMEs to stretch their businesses, and enhance their contribution through increasing exports receipts, and ultimately reducing current account deficit of the country,' he explained.
The collective feedback from the business community underscores a clear demand: the recent monetary easing is a step in the right direction but is widely perceived as insufficient to address the profound challenges facing Pakistan's industrial and export sectors.
