KARACHI, September 13, 2024: Muhammad Kamran Arbi, President of the Site Association of Industry (SAI), has criticized the State Bank of Pakistan’s (SBP) recent 2% cut in the interest rate, arguing that a more substantial reduction to single digits is necessary, along with a long-term, sustainable monetary policy.
He stated that the recent cut did not meet expectations given the current economic conditions, and that only a significant rate reduction would provide businesses with a more stable environment for future planning.
While acknowledging the SBP’s rate cut as a positive move, Arbi dismissed it as insufficient. ‘‘It’s a baby step,’’ he said, emphasizing that the SAI is calling for a reduction in interest rates to single digits.
Arbi also called for clearer communication from the government, noting, ‘‘When the interest rate is reduced to single digits, businesses need a clear roadmap. This will enable businesspeople to plan without further uncertainty regarding future investments.’’
He pointed out that inflation has already dropped to single digits, resulting in a real effective interest rate of approximately 10-11%. Arbi criticized the SBP for its slow response to changing economic conditions and urged for a more substantial and immediate rate cut, or at least a gradual reduction of 5 percentage points. According to Arbi, the SBP should prioritize quantitative easing to stimulate economic growth.
