Monetary Policy Criticized FPCCI/Media/2025 5th May, 2025 Trade & Industry Categorically Demanded a Reduction of 500 bps Atif Ikram Sheikh, President FPCCI

Karachi: Mr. Atif Ikram Sheikh, President FPCCI, has apprised that the business, industry and
trade community of Pakistan is disappointed with the monetary policy as it continues to be based
on a heavy premium vis-à-vis Consumer Price Index (CPI) and the State Bank of Pakistan (SBP)
only reduced the policy rate by a merely 100 basis points (bps) in its Monday meeting against the
proposal and expectation of the industry; i.e. 500 bps reduction.

Mr. Atif Ikram Sheikh highlighted that the CPI, as per government’s own statistics, stood at 0.30
percent in April 2024; but, the policy rate continues to be 11.0 percent as of today – which
reflects a premium of 1,070 basis points (bps) as compared to inflation and it makes no economic
sense, he added.

Mr. Atif Ikram Sheikh continued that, after deliberations from the apex trade and industry
platform with all industries and sectors, FPCCI had demanded a single-stroke rate cut of 500
basis points during the Monday’s monetary policy committee (MPC) meeting to rationalize the
key policy rate; and, align it to the vision of special investment facilitation council (SIFC) – and,
the Prime Minister’s vision for industrial development, import substitution and export growth.

FPCCI Chief noted that the CPI is expected to be in the range of 0 – 3 percent for the months of
May – June 2025 as trade, industry and economists’ expectations. Therefore, he had demanded,
key policy rate should have been brought down to 7 percent with the proposed reduction of 500
bps in today’s monetary policy decision.

Mr. Atif Ikram Sheikh explained that the international oil prices are also expected to remain low
or stable in the months to come and hover around $60 per barrel. It is particularly important as
oil prices are one of the major contributing factors in creating ripple effects of inflationary
pressures in Pakistan.

Mr. Saquib Fayyaz Magoon, SVP FPCCI, explained that, just over the last couple of days,
OPEC+ has announced to enhance their oil output by 411,000 barrels per day for the month of
June 2025 and oil prices are also down 3.9 percent for the global benchmark, i.e. Brent and is
trading at $58.9 per barrel.

Mr. Saquib Fayyaz Magoon added that any unrest on the borders with India is not going to alter
international oil prices in any significant manner. Therefore, the authorities in Pakistan now had
all the prerequisites to announce a substantive rate cut; and do not hold onto their contractionary
and anti-business monetary policy practices, he elaborated.