KARACHI: President Karachi Chamber of Commerce & Industry (KCCI), Muhammad Jawed Bilwani, has voiced strong disappointment over the State Bank of Pakistans (SBP) decision to maintain the policy interest rate at an elevated 11 percent, defying widespread expectations of a cut that could have brought the rate down to single digits.
In a statement, Bilwani criticized the SBPs stance, arguing that with core inflation having significantly receded, there is no sound economic justification for keeping borrowing costs prohibitively high. He said that while the SBP cited the uptick in inflation during May and June and concerns about a moderate rise in the coming months due to energy price pressures, this reasoning was neither convincing nor economically sound.
Bilwani emphasized that many regional economies have reduced interest rates despite facing similar or even more complex challenges, highlighting that Indias policy rate is 6.5 percent, Bangladeshs around 8.5 percent, Indonesias 6.25 percent, and Vietnams below 5 percent. He said Pakistans persistently high rates have restricted working capital, increased default risks, and raised the cost of doing business, ultimately hurting the country’s export competitiveness.
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Calling the SBPs decision a missed opportunity to revive economic growth, Bilwani warned that maintaining high interest rates would further burden SMEs, manufacturers, and the already strained private sector, while stifling economic recovery, industrial revival, and job creation.
He added that the business community had hoped for bold monetary easing to complement fiscal consolidation efforts, but the SBPs inaction risks prolonging stagflation and pushing more enterprises toward closure.
