FPCCI Strongly Denounces Policy Rate Hike Atif Ikram Sheikh, President FPCCI

Karachi: Mr. Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), the apex body representing trade, industry, and commerce across Pakistan, has expressed profound concern, disappointment, and strong disapproval regarding the State Bank of Pakistan’s (SBP) latest decision to increase the policy rate by another 0.5 percent; which brings the benchmark policy rate to a regionally-uncompetitive 12%

Mr. Atif Ikram Sheikh maintained that FPCCI has termed the monetary tightening measure as counterproductive – warning that it deals a severe blow to ongoing economic stabilization efforts, dampens industrial expansion, and further erodes the global export competitiveness of Pakistani products in international markets.

Mr. Atif Ikram Sheikh, denouncing the central bank’s decision, stated that further inflating the cost of borrowing at a time when local manufacturers and commercial enterprises are already grappling with unprecedented operational overheads, soaring utility tariffs, and severe liquidity constraints is a step in the wrong direction.

At a crucial juncture where businesses desperately require affordable credit accessibility and economic stimulus to spur domestic production, sustain operations, and generate vital employment opportunities, tightening monetary policy further suffocates private sector growth and paralyzes investment sentiment, he emphasized.

Mr. Atif Ikram Sheikh pointed out that sustained high interest rates have fundamentally transformed borrowing from a business enabler into an unsustainable financial liability. Instead of curbing inflation – which has largely been driven by structural supply-side bottlenecks, escalating energy costs, and fiscal anomalies rather than excess aggregate demand—tight monetary policies have crippled domestic manufacturing.

FPCCI Chief explained that cost-push inflation continues to run rampant because the underlying drivers of inflation are non-monetary in nature. Consequently, raising interest rates penalizes productive industries without achieving price stability, effectively driving formal businesses toward operational closures or scaling down operations.

Reiterating FPCCI’s firm and consistent stance, the organization strongly urged the government and the central bank to immediately recalibrate their monetary framework and bring the policy rate down to single digits. Single-digit interest rates are an absolute prerequisite to make credit affordable for trade, small and medium enterprises (SMEs), and large-scale manufacturing alike.

Mr. Atif Ikram Sheikh stressed that without reasonable financing costs, local enterprises cannot upgrade their technology, invest in value addition, or compete effectively against regional competitors whose borrowing costs remain significantly lower. High interest rates also place an unmanageable debt-servicing burden on the national exchequer and private borrowers, creating a vicious cycle of fiscal distress and stagnant economic output, he added.

FPCCI President said that the apex body strongly urges the central bank, the federal government, and economic policymakers to adopt a pro-growth, forward-looking monetary stance. Authorities must align interest rates with regional benchmarks and prioritize comprehensive, institutionalized consultations with the business community before rolling out policies that directly impact national economic output, he added.

Brig Iftikhar Opel, SI (M), Retd.

Secretary General