KARACHI: FPCCI has unequivocally demanded key policy rate should be cut down to 9 percent to reflect ground realities and economic indicators of Pakistan as CPI has clocked at 6.9 percent in September 2024-which is 44-month low.

There will still be 200 basis points (bps) premium at 9 percent policy rate; which is safe buffer for any monetary policy which is looking at inflation in single digits, he added.  Atif Ikram Sheikh President FPCCI demanded that an emergent meeting of monetary policy committee of State Bank of Pakistan should be called and decision should be taken on overdue reduction in key policy rate.

Next scheduled MPC meeting is on November 4, which will be too late to pass on relief. We have an opportunity to curtail cost of doing business substantially through making access to finance possible on rational rates, he added. He explained that economy has cooled down over last 16 months; from 38 percent inflation in May 2023 to 6.9 percent in September 2024-it is staggering 6 times reduction, nevertheless, policy rate has dropped only by 450 bps from 22 percent to 17.5 percent. It is biggest contradiction of policymaking and economic governance in Pakistan, he added. 

He elaborated that government of Pakistan will be biggest beneficiary of reduction in interest rate as 1 percent reduction in interest rate translates into approximately Rs 476 billion reduction in debt burden and bringing interest rate in single digits will free up government’s resources for development or infrastructure projects, financing budget deficit through indigenous resources and spending on welfare of people-health, education, poverty alleviation and law and order.  

He maintained that business community of Pakistan and common man have been under severe economic strains for past many years, nonetheless, now room has been made available to provide relief through pro-growth and pro-business measures.