President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Jawed Bilwani has expressed profound disappointment over the State Bank of Pakistan’s (SBP) decision to maintain the policy rate unchanged at 11 percent, calling it an overly cautious and counterproductive stance in light of easing inflation and deteriorating industrial competitiveness.
In a statement issued on Monday, Bilwani stated, “The business community had pinned hopes on a long-overdue reduction in the interest rate to single digit to help kick-start economic activity, reduce the cost of doing business, and support struggling industries. By choosing to maintain the status quo, the SBP has not only ignored market signals but has also dampened business sentiment at a time when the economy urgently requires a boost.”
He noted that inflation has clearly bottomed out, with independent analysts projecting it to remain between 6 to 7 percent for FY26, while both the IMF and the government estimate it at 7.5 percent. In light of these forecasts, the decision to maintain the policy rate at a high level of 11 percent appears unjustified. While the State Bank cited the uptick in inflation to 3.5 percent in May as a reason, this rate still remains relatively low and provides ample room for a further reduction in the interest rate — a step that, regrettably, was not taken, he added.
Bilwani emphasized that such high interest rates have rendered Pakistan’s industrial sector uncompetitive in the regional and global markets. “Our exporters are struggling to maintain their foothold internationally, while domestic manufacturers face increasing pressure from cheaper imports. A rate cut would have provided critical breathing space for industrial revival and job creation”, he added.
While acknowledging global uncertainties such as the Iran-Israel conflict and rising oil prices, Bilwani argued that the SBP’s cautious approach disproportionately penalizes domestic businesses. “External risks are real, but penalizing local producers and investors is not the solution.
Fiscal tightening is already underway, and with a contractionary federal budget, there was ample room for monetary support.”
“In times of economic strain, monetary policy must play a balancing role. Unfortunately, today’s decision signals hesitation when bold, pro-growth action is required,” he lamented. “We appeal to the central bank to act with foresight and empathy towards the productive sectors of the economy. Pakistan cannot afford to stifle its growth potential any longer”, he added.
