RECORDER REPORT

LAHORE: Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has strongly criticized the State Bank of Pakistan’s decision to maintain the policy interest rate at 11 percent, calling it incomprehensible in light of the current economic conditions. Sheikh expressed deep concerns over the adverse impact of this decision on the business environment and the broader economy.

Atif Ikram Sheikh emphasized that, given the prevailing inflation rates, the policy interest rate should ideally be reduced to a range of 6-7 percent to align with economic realities and foster growth. He highlighted that a reduction in the interest rate could have led to a significant decrease in the government’s debt burden by approximately Rs 3,500 billion – providing much-needed fiscal relief.

Sheikh highlighted that inflation has come down to 3 percent in the month of August 2025 as per the government’s own statistics. “Pakistan’s interest rate is significantly higher than those in other countries in the region,” Sheikh noted, pointing out that the elevated rate stifles economic activity and discourages investment. He stressed that for businesses to thrive and remain competitive, the policy rate must be brought down to a single-digit figure.

Saquib Fayyaz Magoon, SVP FPCCI, underscored that maintaining high interest rates directly impacts production costs, which in turn fuels inflation. “A single-digit interest rate would lower production costs, making goods and services more affordable and ultimately contributing to a reduction in inflation,” he explained. He further noted that high interest rates restrict currency circulation, hampering economic activity and growth.

SVP FPCCI also referenced assurances from Federal Finance Minister Muhammad Aurangzeb, who had previously indicated that a reduction in the policy rate was forthcoming. The decision to maintain the status quo, therefore, comes as a setback to the business community’s expectations.

Abdul Mohamin Khan, VP & Regional Chairman Sindh, FPCCI warned that keeping the interest rate unchanged will severely undermine the business environment, discourage investment and hinder economic recovery. He urged the State Bank to reconsider its stance and adopt measures that support businesses, reduce borrowing costs and stimulate economic growth.

Abdul Mohamin Khan added that the business community is the backbone of Pakistan’s economy, stated. “A conducive monetary policy with a single-digit interest rate is essential to boost industrial output, create jobs and stabilize prices. We call on the State Bank to take immediate action to address these concerns and align its policies with the needs of the economy.