Industrialists Disappointed Over State Bank's Decision to Maintain Interest Rate

Acting President of the Korangi Association of Trade and Industry (KATI), Ijaz Ahmed Sheikh, has expressed disappointment over the State Bank's decision to keep the interest rate unchanged at 12%, calling it ineffective for the economy.

He stated that industrialists had high expectations, but their hopes were dashed as no reduction was made. Ijaz Ahmed Sheikh noted that inflation in Pakistan has dropped to its lowest level in nine years, which should have led to a significant cut in the interest rate. However, the State Bank, influenced by IMF negotiations, opted for a cautious policy and maintained the previous rate, which was set when inflation was higher. This decision goes against the expectations of industrialists.

He warned that instead of bringing real improvement to the economy, this decision could further pressure business activities, as industrialists and investors are already burdened with expensive loans. He emphasized that to put the economy on a growth trajectory, it is essential to provide capital at a lower cost, but high interest rates remain a major hurdle.

He further stated that industrialists have long been demanding that the policy rate be brought into single digits to reduce business costs and encourage new investments. However, the State Bank’s decision has been disappointing. He stressed that this is not the time for cautious policies but rather for bold decisions. Without a favorable financial environment for investors and industrialists, economic recovery will remain a challenge.

He urged the government and the State Bank to reduce the policy rate in line with industrialists' expectations to promote industries and create more employment opportunities in Pakistan. He also warned that if the cost of borrowing remains high, national production and exports could suffer.