KARACHI: Business leaders on Monday condemned the State Bank of Pakistan’s decision to maintain the benchmark policy rate at 11.5%, calling the status quo a threat to industrial survival and export competitiveness.
The Monetary Policy Committee’s decision to keep borrowing costs unchanged drew immediate backlash from the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), whose president, Atif Ikram Sheikh, said a double-digit policy rate is “highly detrimental to the nation’s economic survival.”
“Failure to ease borrowing costs will accelerate de-industrialization and severely compromise export targets,” Sheikh said, adding that Pakistan needs foreign exchange earnings from exports to stabilize its economy.
Sheikh accused the central bank of being disconnected from the challenges facing trade and industry, noting that inflation expectations have eased amid a prospective U.S.-Iran peace deal facilitated by Pakistan and the gradual normalization of global energy supplies.
“We are witnessing a cost-of-doing-business crisis across the manufacturing landscape,” Sheikh said. “The SBP’s overly cautious, contractionary stance is starving the private sector of essential capital.”
The FPCCI reiterated its demand for a single-digit interest rate aligned with the vision of the Special Investment Facilitation Council.
Saquib Fayyaz Magoon, senior vice president of FPCCI, said the high cost of capital has made Pakistani exports fundamentally uncompetitive against regional rivals. “Maintaining the status quo only penalizes SMEs and large-scale manufacturing alike, effectively halting capacity expansion and job creation,” he said.
Abdul Mohamin Khan, vice president and Sindh regional chairman at FPCCI, described the impact as “catastrophic,” citing factory closures and scaled-back operations across industrial heartlands. “The status quo is not a measure of stability; it is a recipe for stagnation,” he said.
Separately, acting president of the Karachi Chamber of Commerce & Industry (KCCI), Muhammad Raza, said the business community had expected the central bank to reverse a 100-basis-point increase from the previous policy meeting. He noted improving economic indicators and easing global uncertainties.
“The cost of doing business in Pakistan was already alarmingly high,” Raza said, adding that persistently high interest rates discourage industrial expansion and hinder job creation.
At the Korangi Association of Trade and Industry, President Muhammad Ikram Rajput expressed disappointment and said the decision may further increase challenges for industries, particularly the SME sector. He noted that many global economies are adopting softer monetary policies to support growth.
FPCCI leadership collectively called on the federal government, the Ministry of Finance and the central bank governor to implement a decisive rate cut in the next MPC meeting. “Without transitioning swiftly from a stabilization model to an aggressive, export-led growth framework, the country risks permanent stagnation in its industrial base,” the federation said.
