Islamabad – Pakistan’s leading industrial and business bodies have expressed disappointment over the State Bank of Pakistan’s latest decision to trim the policy rate by 50 basis points, saying the move falls far short of what is needed to revive investment and address the deep-rooted challenges confronting the economy. While the reduction has been welcomed in principle, industry leaders argue that its limited scale offers little real relief to businesses struggling with high costs and weak demand.
Representatives of chambers of commerce and sectoral associations say the marginal cut does not meaningfully lower the cost of borrowing, which remains prohibitively high for most enterprises. They warn that expensive credit continues to restrict industrial expansion, discourage fresh investment and limit job creation, particularly for small and medium-sized businesses that rely heavily on bank financing to sustain operations.
Business leaders have also pointed out that inflation has eased considerably in recent months, creating space for a more aggressive monetary easing. In their view, the central bank could have taken a bolder step to align interest rates with prevailing economic conditions and send a stronger signal of support to the productive sectors of the economy. The current adjustment, they say, is unlikely to unlock stalled projects or restore investor confidence.
Several industry voices are calling for the policy rate to be brought into single digits, arguing that only a substantial reduction would help stimulate economic activity and exports. They caution that without cheaper financing, manufacturers will continue to face rising input costs and shrinking margins, undermining competitiveness both domestically and internationally.
While acknowledging the central bank’s need to balance growth with macroeconomic stability, business leaders stress that monetary policy must be complemented by broader fiscal and structural reforms. These include rationalising taxes, easing regulatory burdens and improving the overall business climate. Until such coordinated measures are taken, they argue, modest rate cuts alone will not be enough to steer Pakistan towards sustainable economic recovery.
This story has been reported by PakTribune. All rights reserved.