Business community calls 2.5 per cent rate cut ‘inadequate’ for real growth

KARACHI: President of the Karachi Chamber of Commerce and Industry (KCCI) Muhammad Jawed Bilwani has some strong thoughts on the recent interest rate cut in Pakistan which dropped by 2.5 per cent to 15 per cent.

While he appreciates the State Bank of Pakistan’s efforts, he feels the reduction isn’t quite enough especially now that inflation is down to single digits.

“We need to see a bigger cut—ideally between 5 per cent and 7 per cent—to catch up with what’s happening in other countries.” Bilwani argues that lowering the interest rate would encourage businesses to borrow more, reduce costs and ultimately help economy grow.

Despite this being the fourth time interest rates have been cut, he points out that high borrowing costs continue to be a real burden particularly for manufacturers.

He’s even calling for a bolder reduction of 500 basis points in the next review to truly alleviate the financial strain on both businesses and consumers.

Bilwani also explains that the recent decrease in inflation isn’t just a result of the SBP policies. Instead, it’s largely due to government initiatives, better agricultural production and falling international oil prices.

“The stability of the rupee plays a crucial role in keeping inflation at bay.” With all this in mind, he’s hopeful for further interest rate cuts, which would provide much-needed relief for the business community.

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