Mr. Atif Ikram Sheikh, President FPCCI, has apprised that the business, industry and trade community of Pakistan is dissatisfied with the monetary policy as it continues to be based on a heavy premium vis-à-vis core inflation as the State Bank of Pakistan (SBP) announced a grossly-insufficient reduction of merely 100 bps on January 27th in its last Monetary Policy Committee (MPC) meeting. He emphasized that the inflation is at a 9-year low in the country.
Mr. Atif Ikram Sheikh maintained that inflation, as per the government’s own statistics, stood at 1.5 percent in February 2025 and 2.4 Percent in January; however, the policy rate is 12.0 percent as of today, which, he added, reflects a premium of 1050 basis points vis-à-vis core inflation.
Mr. Atif Ikram Sheikh continued that, after deliberations across all industries and sectors, FPCCI demands an immediate and single-stroke rate cut of 500 basis points in the upcoming MPC meeting on March 10, 2025, to rationalize monetary policy and align it to the vision of the Special Investment Facilitation Council (SIFC) and the Prime Minister’s vision for economic growth and export growth.
The FPCCI President said that, according to industry estimates, core inflation is expected to be between 1 and 3 percent in Q4FY25, i.e., April and June 2025, on the back of declining prices and easing inflationary pressures.
Mr. Atif Ikram Sheikh explained that international oil prices are also expected to remain stable. In contrast, oil is a major contributing factor to the ripple effects of inflationary pressures in Pakistan. There is a sufficient oil supply in international and regional markets; spare capacity within the OPEC plus countries will be more than enough to keep oil prices below $70s per barrel in the coming months. Therefore, the authorities in Pakistan now have all the prerequisites to announce a substantive rate cut; and do not hold onto their contractionary and anti-business monetary policy practices, he elaborated.
The FPCCI Chief reiterated the apex body’s stance that Pakistan has the lowest cost of doing business, ease of doing business, and access to finance compared to all its competitors in the export markets. Fortunately, the decisive downward trend in inflationary pressures has been continuing for the past many months, and the only viable solution to get back on the economic growth trajectory is to support industry and exports, he added.
Mr. Saquib Fayyaz Magoon, SVP FPCCI, proposed that the interest rate should come down to single digits immediately to enable Pakistani exporters to some extent to compete in the regional and international export markets through reducing the cost of capital in a meaningful way. This step should be accompanied by the fulfilment of government’s promise to rationalize electricity tariff for industry.
