Johar Qandhari, President of the Korangi Association of Trade and Industry (KATI), has expressed disappointment over the State Bank of Pakistan’s decision to reduce the interest rate by 100 basis points, setting it at 19.5%. Qandhari labelled the cut as insufficient, arguing that the business community has long called for a more substantial reduction. He pointed out that Pakistan’s high interest rates have contributed to inflation, capital shortages for industrialists, and businesses’ inability to afford expensive bank loans.

“The SME sector and other industries cannot sustain themselves with such high interest rates. A significant reduction is necessary to foster industrial growth and create employment opportunities,” said Qandhari. He noted that even when inflation was at 11% in May, the interest rate remained unchanged, leading to further inflation increases to over 12%.

Qandhari emphasized that high interest rates have slowed economic growth. “Reducing the policy rate substantially would enhance economic growth and industrialization. The current rate of 19.5% is simply too high for businesses to thrive,” he stated.

The KATI President warned that the continued high interest rate could lead to a severe economic crisis. “Industries are facing capital shortages and cannot afford to operate under these conditions. This could result in industrial closures and increased unemployment,” he cautioned.

Qandhari also highlighted the disparity between the wealthy and the poor, noting that while the rich can profit from bank deposits, those without savings suffer. “The government needs to consider the plight of the poor and provide them with facilities to survive,” he urged.

Qandhari demanded an immediate reduction in interest rates to prevent further industrial closures and avert a deepening economic crisis.