Zubair Tufail, President of the United Business Group (UBG), has urged the State Bank of Pakistan to immediately reduce its policy rate by 100 basis points, following the United States’ decision to cut its interest rate by 25 basis points.
In a statement issued by UBG’s central spokesperson, Gulzar Firoz, Zubair Tufail expressed concerns that the State Bank’s decision to keep the policy rate at 11% is causing growing disappointment among Pakistan’s business community. He explained that investors, who were previously looking to make new investments, have now halted their plans due to the high interest rates.
Tufail pointed out that the business community has repeatedly called for a reduction in interest rates to single digits to promote industrial growth, but the State Bank has once again ignored these calls, leading to increasing frustration within the business sector.
“If the policy rate were reduced to single digits, industrialists would be able to borrow from banks to purchase new machinery, boosting production and creating much-needed jobs. However, the current high rates have stifled investment and hindered industrial progress,” Tufail said.
He warned that maintaining the current policy rate would further undermine business confidence and negatively impact the country’s overall economy.
Highlighting the international context, Tufail noted that the U.S. Federal Reserve had recently reduced its interest rate by 0.25%, bringing it to a range of 3.75% to 4.00%. The U.S. central bank also announced that it would resume limited purchases of Treasury securities, addressing signs of liquidity shortages in the currency markets.
“This is a situation that the U.S. Federal Reserve had previously sought to avoid, and Pakistan must take similar steps. While the U.S. is adjusting its rates to stimulate growth, the State Bank of Pakistan’s decision to maintain high rates is detrimental to new investments and industrial output,” Tufail added.
He concluded by calling for immediate action, urging the central bank to announce a 1% rate cut without waiting for the next meeting of the Monetary Policy Committee.
