Korangi Association of Trade and Industry (KATI) President JunaidNaqi has called on the State Bank of Pakistan (SBP) and the government to reduce interest rates by at least 4 percent in light of the recent drop in inflation. He emphasized that a reduction in the policy rate is crucial to align with economic conditions and the demands of industrialists and traders.
In a statement ahead of the next Monetary Policy Committee (MPC) meeting, Naqi highlighted that inflation had fallen to 6.9 percent in September and is expected to further drop to 6.3 percent in October, based on government data. He proposed that the interest rate should be brought down to 13.5 percent, matching the decrease in inflation. He added that economists across the board are advocating for such a move to facilitate economic growth and ensure the smooth functioning of industrial sectors. Naqi pointed out that the reduction in interest rates has been a long-standing demand of industrialists and businessmen.
He argued that lower borrowing costs would encourage investment, create employment opportunities, and promote economic activities, particularly benefiting small and medium enterprises (SMEs) and large-scale manufacturing, which he referred to as the “backbone of the economy.”
He further warned that if interest rates are not reduced, there is a risk that economic growth, especially in large-scale manufacturing, could be severely hampered. Naqi underscored that a lower interest rate would also boost consumer spending power, contributing to overall economic recovery.
JunaidNaqi’s call for action comes as Pakistan faces the dual challenge of fostering economic growth while managing inflation, making it essential for the SBP to consider a balanced monetary policy.
