Pakistan’s top trade and industry body on Wednesday called for a 500-basis-point (bps) cut in the policy rate, saying businesses remained dissatisfied with monetary policy and viewed interest rates as excessively high despite inflation hitting a nine-year low.
Earlier this month, the government announced inflation had fallen to 1.5 percent in February, down from 2.4 percent in January. However, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) noted the policy rate remained at 12 percent following what it called a “grossly-insufficient reduction of merely 100 bps” in the January 27 Monetary Policy Committee (MPC) meeting.
“After deliberations across all industries and sectors, FPCCI demands an immediate and single-stroke rate cut of 500 basis points in the upcoming MPC meeting on March 10, 2025, to rationalize the monetary policy,” FPCCI President Atif Ikram Sheikh said in a statement.
He added the country’s monetary policy should align with the Special Investment Facilitation Council (SIFC) and the government’s broader vision for economic and export-led growth.
Sheikh said industry estimates suggest core inflation will remain between 1-3 percent in the fourth quarter of FY25 (April-June 2025) due to declining prices and easing inflationary pressures.
He argued with international oil prices expected to stay stable, the government had the conditions necessary to announce a substantial rate cut.
FPCCI Senior Vice President Saquib Fayyaz Magoon also urged policymakers to bring interest rates into single digits to allow Pakistani exporters to compete internationally.
He added that a rate cut should be accompanied by the government’s promised rationalization of electricity tariffs for industries to ensure sustainable growth.
Pakistan has historically maintained a tight monetary stance to curb inflation and stabilize the economy, but the latest calls for aggressive easing highlight growing concerns from businesses over stagnating investment and sluggish industrial activity.
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