The Karachi Chamber of Commerce and Industry (KCCI) on Wednesday expressed strong disappointment over the State Bank of Pakistan (SBP)’s decision to maintain the policy interest rate at 11%, despite widespread calls from the business community for a rate cut to support economic growth.
In a statement, KCCI President Muhammad Jawed Bilwani criticized the central bank’s stance, calling it a missed opportunity to bring interest rates down to single digits amidst easing of core inflation and tentative signs of macroeconomic stabilization.
“There remains no sound economic justification for keeping borrowing costs so prohibitively high,” he said. “The SBP’s rationale—centered around modest inflationary pressure from energy prices—is neither convincing nor economically sound,” he added.
Growth-Oriented Monetary Policy
Bilwani argued that even with a slight uptick in inflation in recent months, Pakistan’s real interest rate remains excessively high, and monetary easing is long overdue. He pointed out that other regional economies with comparable or more complex challenges have already lowered policy rates to support growth. “India’s policy rate stands at 6.5%, Bangladesh at around 8.5%, Indonesia at 6.25%, and Vietnam below 5%. In contrast, Pakistan is still holding at 11%, which is out of step with global and regional trends,” he argued.
Private Sector
According to the KCCI chief, high interest rates are choking working capital flows, particularly for SMEs and manufacturers, increasing the risk of defaults and inflating the cost of doing business. This, he warned, is making Pakistani exports less competitive and slowing down the country’s already fragile industrial momentum.
“The SBP’s inaction risks prolonging stagflation, undermining job creation, and pushing more enterprises toward closure,” he said. “Instead of supporting the private sector, the decision has further burdened it at a time when we need bold, forward-looking measures to revive growth.”
Bilwani emphasized that the business community had expected the central bank to align its monetary policy with the government’s fiscal consolidation efforts, and provide much-needed breathing room for businesses looking to invest, expand, and hire.
While the SBP has defended its decision on grounds of emerging inflation risks and external sector fragility, the KCCI believes the move reflects excessive caution at the expense of economic revival. The chamber urged the central bank to reconsider its policy stance in upcoming meetings, warning that without lower interest rates, Pakistan risks stalling its nascent recovery and missing its window for industrial resurgence.