FPCCI opposes possible policy rate hike, warns of economic impact
FPCCI says Pakistan’s 11.5% policy rate is already pressuring businesses as the SBP prepares to announce its latest monetary policy decision.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday opposed a possible increase in Pakistan’s policy interest rate, warning that higher borrowing costs would hurt businesses, industrial production and economic growth.
FPCCI President Atif Ikram Sheikh said the current policy rate of 11.5% was already placing pressure on businesses and urged the State Bank of Pakistan (SBP) to adopt a business-friendly monetary policy.
The SBP’s Monetary Policy Committee is scheduled to meet on Monday to review the policy rate, with the central bank governor set to announce the monetary policy decision later in the day.
The upcoming decision is being closely watched by businesses, as any change in the benchmark interest rate could affect borrowing costs, investment decisions and industrial activity.
The business community is concerned that a further increase in interest rates could raise financing costs for companies, making it more expensive to manage working capital, purchase raw materials and invest in expansion.
Higher borrowing costs can also discourage businesses from undertaking new projects and limit their ability to increase production, potentially weighing on industrial activity and broader economic growth.
For industries that depend on bank financing to sustain operations and fund expansion, the cost of credit is an important factor in investment decisions. Higher interest rates can also increase borrowing costs for consumers, potentially affecting demand for goods and services.
Sheikh’s remarks highlight the business community’s concerns over the cost of financing and the need for monetary policy to support productive economic activity.
While interest rates are an important tool for controlling inflation, the FPCCI’s position reflects calls for a policy approach that also considers businesses’ financing needs, industrial investment and economic growth.
