With the decline in the inflation and improvement in external account, the businessmen are expecting a significant cut in the monetary policy framework in the next Monetary Policy Committee meeting being held on 10th of this month, urging the authorities to ensure a significant cut in the markup rate to bolster economy and enhance productivity. While talking to a delegation of various trade and industrial associations, the Businessmen Panel (BMP) Chairman and FPCCI former president Mian Anjum Nisar said that State Bank’s tight monetary policy stance had been hurting the national economy for the last many years, thus there is an urgent need to bring it to single digit. He said the State Bank’s tight monetary policy stance had been hurting the national economy for the last many years, thus there is an urgent need to bring it to single digit. He said that it is the State Bank alone that responsible for existing double digit markup but the government is the main player that had made heaviest ever domestic borrowing leaving little breathing space for business community. He said that the domestic investment at the moment is alarmingly low which has sent a negative signal to the potential foreign investors and now is the time that the federal government should give some patient hearing to the private sector calling. He said if the government was seriously desirous of having economic turnaround in the coming years it would have to do two things that are: an immediate freeze on domestic and foreign borrowing and secondly put in place a well-tailored strategy to show-case Pakistan’s potentials to the outer world. He said that the State Bank, before finalizing the upcoming monetary policy, bear in mind the internal and external challenges, the economy is facing today and if it makes a considerable downward cut, the economic activities would get a boost for a long term. He reminded of the government that it is the private sector that has paid all government dues despite the fact that it had been facing a recession like situation therefore the government should give some relief to the businessmen. He expected a reduction of 200bps in the policy rate, potentially lowering it to 20 percent, a level last seen in Mar-Apr 2023. This forecast is underpinned by several favourable economic indicators, suggesting a conducive environment for initiation of reversal in monetary stance. Even with a potential rate cut of 200bps, Pakistan would still align with the IMF’s stance on maintaining a relatively tight monetary policy. Mian Anjum Nisar said that the anticipated rate cut would not only support economic growth but also align with the evolving economic conditions. He said that one of the primary factors supporting the expectation of a rate cut is the downward trajectory of Pakistan’s inflation. Both headline and core inflation figures have shown significant improvement. The average headline inflation for the 10MFY24 has decreased to 25.97 percent, down from 28.23 percent during the corresponding period last year. For May 2024, inflation is anticipated to further decline to 13 percent, which would result in a real interest rate of 900bps, substantially higher than the historic 10-year average of negative 44bps. On the external front, the current account deficit has shown remarkable improvement during the first 10 months of this fiscal year, narrowing by 95 percent to $202 million and this significant reduction has contributed to the stability of the rupee against the US dollar. In its recent country report, the IMF has acknowledged these positive economic developments but has emphasized the importance of maintaining a tight monetary policy to ensure continued stability. However, the IMF also suggested that the stance could be reassessed if Pakistan’s inflation continues to decrease and improvements in the foreign exchange market persist. Since the last monetary policy announcement in Apr 2024, a decline in yields for government securities in both primary and secondary markets has been observed.