Business leaders express concern over SBP’s decision to maintain interest rate at 10.5 percent

KARACHI: Business leaders have voiced disappointment following the State Bank of Pakistan’s (SBP) recent decision to keep the policy interest rate unchanged at 10.5 percent. They argue that this move, combined with already high power and gas tariffs and the ongoing negative impact of the US-Iran conflict on trade, will further burden the economy and hinder efforts to revive industrial and export activities.

According to Abdul Rehman Fudda, President of the Site Association of Industry, the current interest rate will place additional strain on industrial operations and exports. He stated that the decision is unlikely to encourage new investment or support the recovery of key economic sectors.

However, not all business representatives share this view. M. Abdul Aleem, Secretary General of the Overseas Investors Chambers of Commerce and Industry (OICCI), described the SBP’s announcement as "actually a positive surprise as we were anticipating an increase due to ongoing war-type conditions in the region." He added that the decision reflects the SBP monetary policy committee’s confidence in Pakistan’s ability to weather current economic challenges without causing undue hardship to economic stakeholders. "All in all, it is a good decision," Aleem said.

Despite this divergence in opinion, the prevailing sentiment among many business leaders is that the unchanged interest rate, in the context of regional instability and rising costs, will not provide the necessary stimulus for industrial growth or exports. They warn that continued high borrowing costs could discourage both domestic and foreign investors at a time when the economy is already under significant pressure.

The SBP’s decision comes amid heightened uncertainty in the region, with the US-Iran conflict affecting trade flows and contributing to a challenging environment for Pakistani businesses. Industry leaders continue to call for measures that would lower the cost of doing business and help restore confidence in the country’s economic prospects.