Business community split over SBP move

The business community in Pakistan gave a divided response to the State Bank of Pakistan's (SBP) decision to maintain the policy rate at 11.5 per cent during the Monetary Policy Committee's (MPC) meeting on Monday. While some entities welcomed the decision, others criticized it for failing to address the country's economic stagnation.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) expressed disappointment, labeling the decision as highly contractionary and calling for a reduction in the rate to single digits to alleviate the heavy burden of doing business in the country. FPCCI President Atif Ikram Sheikh highlighted various factors such as soaring energy tariffs, rising petroleum prices, geopolitical uncertainties, and exorbitant financing costs that are collectively stifling industrial revival and contributing to a staggering trade deficit.

On the other hand, the Overseas Investors Chamber of Commerce and Industry (OICCI) deemed the SBP's decision as prudent and balanced, citing strong foreign exchange reserves, robust remittances, and uneven industrial recovery as key factors supporting the rationale for maintaining the interest rate. The OICCI emphasized that while inflation and core inflation remain elevated, avoiding further tightening at this stage would provide businesses with policy continuity and room for investment planning.

Similarly, the Rawalpindi Chamber of Commerce and Industry also backed the decision, citing global inflationary pressures stemming from the Middle East conflict, which have led to increased energy and commodity prices. The chamber argued that a steady hand on monetary policy is crucial to the stability that has been painstakingly achieved over the past two years.