Acting President of the Korangi Association of Trade and Industry (KATI), Ejaz Ahmed Sheikh, has urged the State Bank of Pakistan (SBP) to announce a significant reduction in interest rates in the upcoming monetary policy meeting. He stated that with inflation now at its lowest level in nine years, keeping interest rates high is unjustifiable.

“Inflation has dropped to 1.5% in February 2025, marking a significant decline. When inflation is falling, there is no reason to maintain high interest rates,” said Sheikh. He emphasized that the SBP must provide relief to the business community in the monetary policy committee meeting scheduled for March 10, 2025.

He pointed out that inflation has been on a continuous downward trend. In February, the Consumer Price Index (CPI) decreased by 0.8%, and the average inflation for the first eight months of FY2024-25 stood at 5.85%, compared to a staggering 27.96% last year. “Despite this clear decline, if the interest rate remains at its current high level of 12%, it will have a negative impact on industries and the economy,” he warned.

Sheikh further explained that high interest rates are hurting industrial production, investment, and exports. “To reduce business costs and boost economic activity, an immediate and substantial cut in interest rates is essential. The SBP needs to adopt a realistic approach to support industries and drive economic growth,” he asserted.

The acting president KATI called on the government and policymakers to understand the challenges faced by businesses and prioritize industrial development. “This is not the time to persist with a tight monetary policy but rather to take practical steps toward economic stability and growth,” he stressed.

“A reduction in interest rates will not only encourage investment but also create employment opportunities and boost exports, ultimately benefiting the overall economy,” Sheikh concluded.