FPCCI Urges State Bank to Cut Interest Rate to Nine Percent

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) is calling for a significant reduction in the key policy interest rate, urging it to be lowered to nine percent. This demand comes in light of the recent Consumer Price Index (CPI) data, which revealed that inflation has reached a 44-month low of 6.9 percent in September. Such a drop in inflation presents a unique opportunity for the State Bank of Pakistan to reconsider its monetary policy.

FPCCI President Atif Ikram Sheikh has made it clear that a policy rate of nine percent would still maintain a 200 basis points (bps) premium, providing a safe buffer for any monetary policy aimed at keeping inflation in the single digits. In his statement, Sheikh emphasized the importance of an urgent meeting of the Monetary Policy Committee (MPC) to discuss this overdue reduction in the benchmark interest rate.

The next MPC meeting is scheduled for November 4, which Sheikh argues is too late to implement any relief measures. He believes that by lowering the interest rate, businesses would have a better chance to reduce their operational costs significantly. This, in turn, would facilitate easier access to finance at more reasonable rates, ultimately benefiting the economy.

Lowering the interest rate could be a game-changer for many businesses struggling with high costs. It would not only help in reducing the financial burden on companies but also encourage investment and growth in various sectors. As the economy continues to navigate through challenges, the FPCCI's call for a rate cut highlights the need for timely and effective monetary policy decisions that can stimulate economic activity.

The FPCCI's demand for a drastic cut in the interest rate is a reflection of the current economic landscape. With inflation at a low point, the opportunity to make financial adjustments is ripe. It is crucial for the State Bank of Pakistan to consider these recommendations seriously, as they could pave the way for a more robust and resilient economy in the future.