The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has criticized the State Bank of Pakistan’s (SBP) latest decision to raise the policy rate by 0.5 percentage points to 12 percent, urging the government and central bank to bring interest rates down to single digits.
FPCCI President Atif Ikram Sheikh said the increase would raise borrowing costs for businesses already facing high operating expenses, rising utility tariffs, and liquidity constraints.
He warned that tighter monetary policy could weaken industrial expansion, discourage investment, and reduce the international competitiveness of Pakistani exports.
Sheikh argued that high interest rates had made borrowing increasingly difficult for manufacturers and commercial enterprises at a time when affordable credit was needed to support production, maintain operations, and create jobs.
He said inflation was being driven largely by supply-side constraints, rising energy costs, and fiscal issues rather than excess demand.
In his view, higher interest rates would place additional pressure on productive industries without adequately addressing the underlying causes of inflation.
The FPCCI president called on the government and the central bank to recalibrate monetary policy and reduce the policy rate to single digits.
He said lower borrowing costs were essential for small and medium-sized enterprises, traders, and large-scale manufacturers to invest in technology, expand value-added production, and compete with regional businesses.
Sheikh also warned that high interest rates increased debt-servicing costs for both the government and private borrowers, potentially adding to fiscal pressure and limiting economic growth.
FPCCI urged the central bank, federal government, and economic policymakers to adopt a more growth-oriented monetary approach, align interest rates with regional benchmarks, and consult the business community before introducing policies that directly affect economic activity.
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