The Korangi Association of Trade and Industry (KATI) has expressed concern over the State Bank of Pakistan’s decision to raise the policy rate by 50 basis points to 12%, warning that higher borrowing costs could slow industrial growth and economic recovery.

KATI President Sheikh Umer Rehan said industries require affordable financing to support investment, production and business expansion. He noted that the rate hike would increase production costs, discourage new investments and create additional challenges for small and medium-sized enterprises (SMEs).

He argued that inflation should be addressed through lower energy costs, tax reforms and business-friendly policies rather than relying solely on monetary tightening. He urged the SBP to consider industry needs and economic recovery in future policy decisions and called for a gradual reduction in interest rates to support investment, exports, and employment.