Business community demands further cut in SBP’s policy rate

Business community has demanded further cut in the policy rate to facilitate growth of industrial sector.

“We were expecting higher cut in the key policy rate in the aftermath of considerable decline in inflation. Core inflation has come down to 11.8 per cent in May 2024, the lowest in the 30-month period. Still, we welcome the recent cut in the policy rate as it is a step in the right direction. The State Bank of Pakistan (SBP) should keep reducing policy rate and gradually bring to a single digit”, said Mian Misbah-ur-Rehman, Chairman Founders Group of Lahore Chamber of Commerce and Industry.

Mr Misbah, who has previously served as the LCCI president, said that the consumer prices were showing a declining trend and now the government should improve access of the business community to the finance by cutting the key policy rate. He suggested the SBP to target core inflation instead of the general inflation. The central bank needed to strip out volatile changes in particular prices to distinguish inflation from temporary fluctuations in inflation. He suggested ensuring the effectiveness of price control measures through actions against hoarding and malpractices. Drop is inflation was due to the administrative measures taken by the government along with improved agricultural production and reduction in Petroleum price, he said, adding that production of wheat, rice, sugarcane, cotton and maize has increased considerably.

He said that stability in exchange rate was also one of the reasons for easing the inflation as huge quantities of commodities were regularly being imported.

“We hope that the SBP will continue decreasing the policy rate to facilitate borrowings by the private sector. It will prove favorable for the economy by encouraging business expansion and industrialization”, Mian Misbah-ur-Rehman said.