FPCCI Chief Criticizes 1% Cut in Policy Rate, Urges a Bigger Reduction

Federation of Pakistan Chambers of Commerce & Industry (FPCCI) President Atif Ikram Sheikh Monday said 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 Consumer Price Index (CPI) and the State Bank of Pakistan (SBP) only reduced the policy rate by a merely 100 basis points (bps) against the proposal and expectation of the industry i.e. 500 bps reduction. Sheikh highlighted that the CPI, as per government’s own statistics, stood at 0.30 percent in April 2024; but the policy rate continues to be 11.0 percent as of today – which reflects a premium of 1,070 basis points (bps) as compared to inflation and it makes no economic sense, he added. He said 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 the 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. FPCCI Chief noted that the CPI is expected to be in the range of 0 – 3 percent for the months of May – June 2025 as trade, industry and economists’ expectations. Therefore, he had demanded, key policy rate should have been brought down to 7 percent with the proposed reduction of 500 bps in today’s monetary policy decision. He explained that the international oil prices are also expected to remain low or stable in the months to come and hover around $60 per barrel. It is particularly important as oil prices are one of the major contributing factors in creating ripple effects of inflationary pressures in Pakistan.