FPCCI Denounces SBP Policy Rate Hike, Calls for Single-Digit Interest Rates
FPCCI President Atif Ikram Sheikh criticises the policy rate hike and calls for lower borrowing costs.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly criticised the State Bank of Pakistan’s (SBP) latest decision to raise the policy rate by 0.5 percentage points to 12%. FPCCI President Atif Ikram Sheikh warned that higher borrowing costs could weaken industrial growth, discourage investment and reduce Pakistan’s export competitiveness.
Sheikh said the latest monetary tightening could undermine ongoing economic stabilisation efforts. He argued that businesses need affordable financing to expand production, sustain operations and create employment.
FPCCI Warns of Higher Business Costs
According to Sheikh, manufacturers and commercial enterprises already face high operating expenses, rising utility tariffs and liquidity constraints. Therefore, increasing borrowing costs further could place additional pressure on businesses and limit private-sector investment.
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He also argued that sustained high interest rates have turned business financing into a significant financial burden. In his view, structural supply-side bottlenecks, rising energy costs and fiscal challenges contribute substantially to inflation.
Sheikh maintained that monetary tightening alone cannot address these underlying pressures. Instead, he warned, higher borrowing costs could restrict domestic manufacturing and force some businesses to reduce operations or consider closure.
Call for Single-Digit Policy Rate
Reiterating FPCCI’s position, Sheikh urged the government and the central bank to reconsider their monetary policy and bring the policy rate into single digits. He said lower interest rates would help trade, small and medium-sized enterprises (SMEs) and large-scale manufacturers access affordable credit.
Moreover, Sheikh stressed that businesses need reasonably priced financing to upgrade technology, increase value addition and compete with regional rivals. He added that high interest rates also raise debt-servicing costs for the government and private borrowers, potentially worsening fiscal pressures and slowing economic activity.
FPCCI Seeks Consultation With Business Community
The FPCCI president called on the central bank, federal government and economic policymakers to adopt a more growth-oriented monetary approach. He urged authorities to consider regional interest-rate benchmarks and consult business representatives before introducing policies that affect economic activity.
FPCCI said policymakers should balance price stability with the financing needs of productive industries to support investment, exports and sustainable economic growth.
