KARACHI: Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Rehan Hanif have urged the State Bank of Pakistan (SBP) to reduce the policy rate by at least 100 basis points, bringing it down to 10 percent, citing a significant moderation in inflation compared to the high levels recorded in 2024.
In a joint statement, they noted that the SBP had kept the policy rate unchanged at 11 percent for the fourth consecutive time, including its latest decision announced on October 27, 2025. They said that maintaining such elevated interest rates for an extended period was placing immense pressure on the economy and limiting growth prospects.
The business leaders highlighted that Pakistan’s external sector had shown improvement, supported by IMF program inflows and a gradual increase in foreign exchange reserves, which had eased pressure on the macroeconomic framework. Despite these improvements, high borrowing costs continued to negatively impact industries, small and medium enterprises (SMEs), exporters, and investors.
They emphasized that expensive financing was discouraging investment, delaying expansion plans, and restricting job creation. According to them, a policy rate cut of at least 100 basis points could help revive investment sentiment, strengthen working capital positions, and encourage businesses to expand operations and hiring.
The BMG chairman and KCCI president further stated that a timely reduction in the interest rate would help redirect bank lending toward productive sectors instead of excessive investment in government securities, thereby supporting real economic growth.
While acknowledging the SBP’s responsibility to control inflation, they maintained that current economic indicators supported a carefully calibrated rate cut without compromising price stability. They stressed that improved communication and appropriate safeguards could ensure inflation remained under control.
Comparing regional trends, they pointed out that Pakistan’s policy rate was among the highest in the region. India’s repo rate stood around 5.25 percent, Sri Lanka’s policy rate hovered near 7.75 percent, Vietnam and Nepal maintained rates close to 4.5 percent, while Bangladesh’s repo rate was approximately 10 percent. This disparity, they said, had placed Pakistani exporters at a competitive disadvantage.
The business community, they added, was eagerly awaiting a positive signal from the central bank. They expressed hope that the Monetary Policy Committee (MPC) meeting scheduled for December 15 would deliver a 100-basis-point rate cut to support economic recovery and restore business confidence.