Business leaders are appealing to the State Bank of Pakistan to reduce its policy rate by a whopping 300-500 basis points to boost trade and industrial activities as inflation rates decline. The appeal comes ahead of the State Bank of Pakistan’s Monetary Policy Committee meeting on Monday to discuss policy adjustments.
FPCCI President Atif Ikram Sheikh recently expressed disappointment over the current monetary policy, which he stated imposes a heavy premium over core inflation. Government statistics show that inflation came at 6.9% in September, while the policy rate remains at 17.5%, showing a huge premium of more than 1,000 basis points.
He wanted a one-time cut of 500 basis points to achieve the SIFC objectives, thus propelling economic growth and boosting export potential. In this regard, he drew attention to the fact that the core inflation for October had printed at 7.2% and that with news that Saudi Arabia is thinking of cutting oil prices for Asia in December, international oil prices are only likely to fall further. Therefore, this becomes a valid demand for cutting the policy rate.
FPCCI Senior Vice-President Saquib Fayyaz Magoon said that at a 12.5% interest rate, Pakistani exporters will be able to reduce the cost of capital for international competition.
Karachi Chamber of Commerce and Industry (KCCI) president Muhammad Jawed Bilwani said on this day that as inflation has been controlled, commodity prices are being stabilized at least a reduction of 300-500 basis points is inevitable in the upcoming monetary policy, as would ease up pressure from the business circles, raise economic activities further, and revive large scale manufacturing which has been declined consistently, he added.
To Read More: Business