On Wednesday, Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance and former provincial minister Mian Zahid Hussain said interest rate hike by 0.25 percent will hit economic activities.

The decision will increase the cost of doing business, hitting increasing economic activities while it will make exports costly to some extent.

Mian Zahid Hussain said that the business community favours interest rates at five percent but was satisfied over a seven percent interest rate. They were borrowing, resulting in economic activity, while masses were also interested in house and car financing, which will be compromised.

Talking to the business community, the veteran business leader said that economic activity had triggered imports, but stagnant exports have increased trade and current account deficit.

The situation resulted in exchange rate erosion fanning inflation, which prompted the central bank to hike rates to reduce demand in the market, reducing employment opportunities and GDP.

He noted that Pakistan is an agricultural country but wheat, sugar, cotton and pulses worth billions are being imported, putting pressure on forex reserves and resources.

The policymakers should focus on agriculture and exports, adding that the SPB reduced policy rates on the business community’s demand from 13.25 percent to 7 percent, which helped businesses during the pandemic.

Now, the SBP has said that interest rates could be increased if inflation was not restrained, resulting in unemployment.

The government should improve supply chains and combat inflation by promoting business opportunities. At the same time, the private sector should be engaged to import food items for which loans should be provided, which will help control prices.

The timely imports by the private sector will fend off any crisis of food items shortly, he said.