KARACHI: Acting President of the Korangi Association of Trade and Industry (KATI) Ejaz Ahmed Sheikh has urged the State Bank of Pakistan (SBP) to announce a significant reduction in interest rates in its upcoming monetary policy meeting. He argued that, with inflation now at its lowest level in nine years, maintaining high interest rates is unjustifiable.

“Inflation dropped to 1.5 per cent in February 2025, marking a significant decline. When inflation is falling, there is no reason to keep interest rates high,” said Sheikh. He emphasised that the SBP must provide relief to the business community in the monetary policy committee meeting scheduled for March 10, 2025.

He highlighted that inflation has been consistently decreasing. In February, the Consumer Price Index (CPI) fell by 0.8 per cent, while the average inflation rate for the first eight months of FY2024-25 stood at 5.85 per cent, a sharp contrast to the 27.96 per cent recorded last year. “Despite this clear decline, if the interest rate remains at its current high level of 12 per cent, it will negatively impact industries and the economy,” he warned.

Sheikh further explained that high interest rates are hindering industrial production, investment and exports. “To reduce business costs and stimulate economic activity, an immediate and substantial cut in interest rates is essential. The SBP must adopt a realistic approach to support industries and drive economic growth,” he asserted.

The acting president of KATI called on the government and policymakers to recognise the challenges faced by businesses and prioritise industrial development. “This is not the time to persist with a tight monetary policy but rather to take practical steps towards economic stability and growth,” he stressed.

“A reduction in interest rates will not only encourage investment but also create employment opportunities and boost exports, ultimately benefiting the overall economy,” Sheikh concluded.