The acting president of the Chamber of Commerce and Industry, Altaf A. Ghaffar, rejected the State Bank’s decision to reduce the interest rate by 2% to 17.5%, stating that this decision does not correspond with the rate at which inflation is decreasing.
Altaf A. Ghaffar mentioned that the Karachi Chamber expected a reduction of at least 5% in the interest rate. With the 200 basis points reduction, the policy rate is now at 17.5%, which is still very high. He emphasized that it should be reduced more aggressively and brought down to a single digit, between 7-8%, to align with other countries in the region and the world.
He stated that the business community wants to see the interest rate in single digits, which would certainly encourage borrowing and promote expansion due to lower business costs, which would ultimately prove favorable for the economy.
He added that it is encouraging to see that the State Bank of Pakistan continues to ease its monetary policy stance, as this is the third consecutive reduction, bringing the interest rate down from 22% to 17.5%.
He emphasized that the interest rate should be lowered more aggressively to promote economic growth and reduce the financial burden on businesses and consumers.
The acting president of the Karachi Chamber of Commerce and Industry pointed out that the tight monetary policy stance adopted by the State Bank resulted in extraordinarily expensive loans, which significantly damaged the economy, particularly by increasing business costs.
He said that due to this policy, the manufacturing sector suffered greatly, making relief in the form of a substantial reduction in the interest rate essential.
While acknowledging the third consecutive interest rate cut, he expressed hope that the State Bank would continue this trend in its next review by reducing the policy rate by at least 500 basis points.
Altaf A. Ghaffar remarked that although inflation has dropped significantly, this reduction is not due to the State Bank’s tight monetary policy stance but rather due to the government's administrative measures and improvements in agricultural production.
He also noted that the stability of the rupee is a major factor in reducing inflation, as Pakistan regularly imports large quantities of commodities, and the rupee’s value directly helps in lowering inflation.
Altaf Ghaffar expressed hope for further interest rate cuts and said that if such a decision is made, the entire business community, which has been severely affected by extremely high business costs, will warmly welcome it.
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