Karachi/Islamabad: The State Bank of Pakistan’s (SBP) recent decision to cut its benchmark policy rate by 100 basis points to 11% has drawn sharp criticism from Pakistan’s business community, which had been strongly advocating for a more aggressive reduction into single digits to revive industrial activity and investment.
While the move received a restrained nod from multinational firms, domestic industry leaders and business associations expressed disappointment, terming the cut inadequate to counter economic stagnation and restore competitiveness.
Presenting a contrasting perspective, Ehsan Malik, CEO of the Pakistan Business Council (PBC), noted that the 100bps reduction—greater than his expectation of a 50bps cut—was unexpected given the current macroeconomic environment.
“With imports climbing, the trade gap widening, and geopolitical uncertainties still looming large, the decision suggests the rate cut cycle may be nearing its end,” he said.
Malik added that the SBP’s emphasis on maintaining a cautious monetary posture aligns with the PBC’s long-standing recommendation for stability and predictability in monetary policy, allowing businesses to plan with more confidence over the short to medium term.
OICCI View
The Overseas Investors Chamber of Commerce and Industry (OICCI) took a more optimistic view.
Its Secretary General, M. Abdul Aleem, called the rate cut “a well-calibrated and better-than-expected decision,” emphasizing that Pakistan’s economy is now poised for a growth rebound.
“Economic decisions must be based on data and foresight, not the demands of specific groups,” he said.
Aleem urged key stakeholders to proceed with investment plans to stimulate various sectors—including large-scale manufacturing, exports, trade, housing, and real estate.
He also noted that current international oil prices are favorably low, which should support macroeconomic stability. Nonetheless, he cautioned that regional border tensions must be closely monitored.
However, this measured endorsement was overshadowed by strong opposition from local industry representatives.
FPCCI View
Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), criticized the SBP for maintaining what he described as an excessive monetary premium over the Consumer Price Index (CPI).
“The central bank should have slashed the policy rate to at least 7%, considering the CPI was just 0.30% in April and is projected to remain between 0–3% in May and June,” he argued.
Sheikh cited low global oil prices as further justification for a deeper rate cut, asserting that the current policy stance is stifling industrial recovery.
Echoing this sentiment, Muhammad Jawed Bilwani, President of the Karachi Chamber of Commerce and Industry (KCCI), described the interest rate cut as “a step in the right direction, but grossly insufficient for meaningful economic revival.”
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He criticized the SBP for not aligning its monetary policy with regional trends, highlighting that Pakistan’s interest rate remains among the highest in Asia, despite having one of the lowest inflation rates.
“India’s benchmark rate stands at 6%, Bangladesh at 10%, Vietnam at 3%, and Thailand at 1.75%—all lower than Pakistan’s despite similar or higher inflation,” Bilwani noted.
He argued that these countries are proactively supporting their business sectors, while Pakistani enterprises continue to face unmanageable borrowing costs.
“This disparity places our industry at a severe disadvantage regionally and globally,” he warned.
Across the board, industry voices continue to push for a significant easing in monetary policy to facilitate credit access, reduce the cost of doing business, and re-ignite investment and production.
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While the SBP’s decision is seen as a tentative move toward recovery, the consensus among domestic stakeholders is clear: bolder and faster monetary easing is necessary to support sustainable economic growth.
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