Inflation Down to Lowest Point in 9 Years Trade & Industry Demands Single-Stroke Cut By 500 bps in Interest Rate Atif Ikram Sheikh, President FPCCI

Karachi: Mr. Atif Ikram Sheikh, President FPCCI, has apprised that the business, industry and trade
community of Pakistan is dissatisfied with the monetary policy as it continues to be based on a heavy
premium vis-à-vis core inflation as the State Bank of Pakistan (SBP) announced a grossly-insufficient
reduction of merely 100 bps on January 27thin its last Monetary Policy Committee (MPC) meeting. He
emphasized the fact that the inflation is at a 9-year low in the country.

Mr. Atif Ikram Sheikh maintained that inflation, as per government’s own statistics, stood at 1.5 percent
in February 2025 and 2.4 Percent in January; but, the policy rate is 12.0 percent as of today – which
reflects a premium of 1050 basis points vis-à-vis core inflation, he added.

Mr. Atif Ikram Sheikh continued that, after deliberations across all industries and sectors, FPCCI demands
an immediate and single-stroke rate cut of 500 basis points, in the upcoming MPC meeting on March 10,
2025 to rationalize the monetary policy; and, align it to the vision of special investment facilitation
council (SIFC) and the Prime Minister’s vision for economic growth and exports’ growth.

FPCCI President said that as per industry estimates, the core inflation is expected to be in the range of 1 –
3 percent in Q4FY25; i.e. April – June 2025 on the back of declining prices and easing inflationary
pressures.

Mr. Atif Ikram Sheikh explained that the international oil prices are also expected to remain stable;
whereas, oil is one of the major contributing factors in creating ripple effects of inflationary pressures in
Pakistan. There is sufficient oil supply in international and regional markets; and, spare capacity within
the OPEC plus countries will be more than enough to keep oil prices in the lower side of $70s per barrel
in the coming months. Therefore, the authorities in Pakistan now have all the prerequisites to announce a
substantive rate cut; and do not hold onto their contractionary and anti-business monetary policy
practices, he elaborated

FPCCI Chief reiterated the apex body’s stance that cost of doing business; ease of doing business and
access to finance in Pakistan is at the lowest as compared to all its competitors in the export markets.
Fortunately, the decisive downward trend in inflationary pressures has been continuing for the past many
months; and, the only viable solution to get back on economic growth trajectory is to support industry and
exports, he added.

Mr. Saquib Fayyaz Magoon, SVP FPCCI, proposed that the interest rate should come down to single
digits immediately to enable Pakistani exporters to some extent to compete in the regional and
international export markets through reducing the cost of capital in a meaningful way. This step should be
accompanied by the fulfilment of government’s promise to rationalize electricity tariff for industry.