KARACHI: President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Atif Ikram Sheikh has expressed dissatisfaction with the country’s monetary policy, saying that it remains heavily skewed against core inflation.
He criticised the State Bank of Pakistan (SBP) for announcing an insufficient reduction of merely 100 basis points (bps) in its last Monetary Policy Committee (MPC) meeting on 27 January.
He emphasised that inflation is at a nine-year low and pointed out that, according to the government’s data, inflation stood at 1.5 per cent in February 2025 and 2.4 per cent in January 2025. Despite this, the policy rate remains at 12 per cent, reflecting an excessive premium of 1,050bps over core inflation, he added.
Sheikh said that, after extensive discussions with representatives from various industries, the FPCCI demands an immediate and substantial rate cut of 500bps in the upcoming MPC meeting on March 10, 2025. He argued that this step is essential to align monetary policy with the vision of the Special Investment Facilitation Council (SIFC) and the prime minister’s strategy for economic and export growth.
The FPCCI president further noted that, according to industry estimates, core inflation is expected to remain within the 1-3 per cent range during Q4FY25 (April-June 2025), owing to declining prices and easing inflationary pressures.
He also highlighted that global oil prices are expected to remain stable, a key factor in controlling inflationary trends in Pakistan. With sufficient oil supply in international and regional markets and OPEC+ countries maintaining spare capacity, oil prices are likely to stay in the lower $70s per barrel in the coming months. Given these factors, he urged the authorities to implement a significant rate cut and move away from contractionary and anti-business monetary policies.
Sheikh reiterated the FPCCI’s stance that the cost of doing business, ease of doing business, and access to finance in Pakistan are among the lowest compared to its export competitors. He stressed that the declining inflationary trend over the past several months provides an opportunity to support industry and exports as the only viable path towards economic recovery.
Senior Vice President of FPCCI Saquib Fayyaz Magoon also emphasised the need for interest rates to be brought down to single digits. He argued that lowering the cost of capital is crucial for Pakistani exporters to compete regionally and internationally. He also urged the government to fulfil its promise of rationalising electricity tariffs for industry to further ease financial pressures on businesses.
