Lahore Business Community Advocates for Lower Policy Rate

The business community in Lahore is advocating for a decrease in the policy rate to bolster the growth of the industrial sector. Despite a significant drop in inflation, with core inflation falling to 11.8% in May 2024, the lowest in 30 months, they believe a more substantial cut in the key policy rate is essential. They appreciate the recent reduction but stress the need for continuous decreases by the State Bank of Pakistan (SBP) to eventually achieve single-digit rates.

It is recommended that the SBP concentrates on core inflation rather than general inflation to eliminate volatile price changes and differentiate between actual inflation and temporary fluctuations. Additionally, actions against hoarding and malpractices are advised to ensure the efficacy of price control endeavors.

The decline in inflation is credited to government interventions, enhanced agricultural output, and reduced petroleum prices. The increased production of vital crops such as wheat, rice, sugarcane, cotton, and maize has played a crucial role. Moreover, the stability in the exchange rate has helped alleviate inflation, especially due to steady imports of commodities.

The business community is optimistic about further reductions in the policy rate to facilitate private sector borrowing. This step is viewed as advantageous for the economy as it promotes business expansion and industrial progress.

The push for a lower policy rate in Lahore reflects the business community's desire to stimulate economic growth and foster a conducive environment for industrial activities. By addressing inflation through targeted measures and advocating for continuous rate cuts, stakeholders aim to enhance economic stability and encourage investment in the region.