Atif Ikram Sheikh, President FPCCI, has informed that the business, industry, and trade community of Pakistan is disappointed with the monetary policy as it continues to be based on a heavy premium vis-à-vis the Consumer Price Index (CPI). The State Bank of Pakistan (SBP) only reduced the policy rate by merely 100 basis points (bps) in its Monday meeting against the industry’s proposal and expectation, i.e., a 500 bps reduction.
Mr. Atif Ikram Sheikh highlighted that the CPI, as per the government’s own statistics, stood at 0.30 percent in April 2024; however, the policy rate continues to be 11.0 percent as of today, which reflects a premium of 1,070 basis points (bps) compared to inflation, and it makes no economic sense, he added.
Mr. Atif Ikram Sheikh continued that, after deliberations from the apex trade and industry platform with all industries and sectors, FPCCI had demanded a single-stroke rate cut of 500 basis points during Monday’s monetary policy committee (MPC) meeting to rationalize the key policy rate; and, align it to the vision of special investment facilitation council (SIFC) – and, the Prime Minister’s vision for industrial development, import substitution and export growth.
The FPCCI Chief noted that the CPI is expected to be between 0 and 3 per cent for the months of May and June 2025, as per trade, industry, and economists’ expectations. Therefore, he demanded that the key policy rate be lowered to 7 per cent with the proposed reduction of 500 bps in today’s monetary policy decision.
Mr Atif Ikram Sheikh explained that international oil prices are also expected to remain low or stable in the coming months and hover around $60 per barrel. It is particularly important as oil prices are a major contributing factor to the ripple effects of inflationary pressures in Pakistan.
Mr. Saquib Fayyaz Magoon, SVP FPCCI, explained that, just over the last couple of days, OPEC+ has announced to enhance its oil output by 411,000 barrels per day for the month of June 2025. Oil prices are also down 3.9 percent for the global benchmark, Brent, and are trading at $58.9 per barrel.
Mr Saquib Fayyaz Magoon added that any unrest on the borders with India would not alter international oil prices significantly. Therefore, he elaborated that the authorities in Pakistan now had all the prerequisites to announce a substantive rate cut and did not hold onto their contractionary and anti-business monetary policy practices.
