KARACHI: The State Bank of Pakistan’s (SBP) decision to reduce the policy rate by 50 basis points to 10.50 per cent received mixed reactions on Monday. Foreign investors and business groups welcomed the move as cautious, while local business groups criticised it as insufficient to revive economic activity.
The Overseas Investors Chamber of Commerce and Industry (OICCI) termed the cut a prudent and measured step. OICCI Secretary General and Chief Executive Abdul Aleem said the reduction would help ease financing conditions while maintaining overall economic stability.
He added that a gradual approach allows businesses to plan investments with greater confidence. According to OICCI, such easing can support sustainable growth without creating macroeconomic risks.
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However, the wider business community expressed disappointment, calling the reduction marginal and ineffective. Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Rehan Hanif said the cut failed to address the severe challenges faced by businesses.
Mr Hanif argued that borrowing costs in Pakistan remain among the highest in the region despite declining inflation. He noted that regional economies operate with single-digit interest rates, enabling industries to remain competitive.
He warned that high financing costs discourage expansion, force closures of marginal units, and reduce employment. This situation, he said, ultimately lowers economic output and government revenues.
Echoing these concerns, Federation of Pakistan Chambers of Commerce and Industry Senior Vice President Saquib Fayyaz Magoon said the cut would not boost exports or attract new investment. He stressed that interest rates should be reduced to single digits to match regional peers.
Industry leaders also highlighted high energy tariffs, fuel prices, taxation, and exchange rate volatility as compounding factors. SITE Association of Industry President Ahmed Azeem Alvi said the current rate regime was contributing to job losses.
Read More: Policy Rate Cut Draws Mixed Reaction Across Pakistan
Business figures warned that prolonged high interest rates would continue to suppress growth. They urged the central bank to announce a more substantial reduction to support production, employment, and economic recovery.