There is great demand by the business community to significantly cut the interest rate in the upcoming monetary policy saying a cut in policy rate will provide breathing space for industrial revival and job creation. The business community claims that the industries are not supported as such , they could see rising unemployement, declining investment and missed revenue targets. Further , it is imparative that the government and the State Bank of Pakistan should provide immediate relief by cutting down rates to single digit for the revival of industrial activity, boost exports and provide relief for counrty’s macro economic fundametals and estimated saving of Rs. 3.5 trillion annually by reducing the debt servicing burden said ateeq ur rehman (economic and financial analsyt)
On the other hand lower interest rates move capital abroad by investors in search of higher returns due to low interest rates , saving accounts , term deposits and governent bonds.
Low returns reduce motivation to save particularly the younger workers.
The Banks should consider the agony and anguishes of their saving account holders mostly senior citizens , disables, pensioners , endowment funds, etc the reduction in interest rate should not reduce their income of dependency and livelihood . Normally, the reduction in interest rate reduces the income of the depositor and it become very difficult for them to meet the challenges and both the end of the day, all together . In short , reduction in interest rate becomes a curse for them , added ateeq.
This is a great challenge the monetary policy should bring relief to the economic growth from both point of view that is the industry / business and the household.
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