U.S. Rate Cut Prompts Call for Pakistan Interest Rate Reduction
Pakistan Interest Rate Cut discussions gained momentum after the U.S. Federal Reserve lowered its benchmark rate by 25 basis points.
Responding to the move, Zubair Tufail, President of the United Business Group (UBG), urged the State Bank of Pakistan (SBP) to immediately announce a 100-basis-point (1%) reduction in the policy rate to restore investor confidence and stimulate industrial growth.
Business Community Seeks Relief from High Rates
In a statement released by UBG spokesperson Gulzar Firoz, Tufail warned that maintaining the policy rate at 11 percent is hurting Pakistan’s industrial and investment outlook.
“Investors who were ready to expand operations have now halted plans because of the high interest rates,” he said.
He reminded that the business community has long demanded single-digit rates to promote industrial growth, but the SBP has repeatedly ignored these calls.
“If the policy rate were cut to single digits, industrialists could borrow to purchase machinery, boost production and create jobs,” Tufail added.
Comparison with U.S. Monetary Policy
Tufail noted that the U.S. Federal Reserve recently reduced its rate by 0.25 percent, bringing it to a range of 3.75 % – 4.00 %. The Fed also announced limited purchases of Treasury securities to address liquidity pressures.
“While the U.S. is adjusting rates to stimulate growth, Pakistan is doing the opposite,” he remarked. “Keeping rates high is detrimental to new investment and industrial output.”
He stressed that Pakistan must adopt a pro-growth monetary policy similar to the U.S. and regional economies that are lowering rates to support expansion.
Impact on Business Confidence and Economy
The Pakistan Interest Rate Cut proposal, according to Tufail, would re-energize entrepreneurship and improve business sentiment. He warned that continuing with the 11 percent rate would further erode confidence and slow economic recovery.
“High borrowing costs have stifled industrial progress and pushed entrepreneurs away from expansion,” he said.
Tufail added that a rate cut would help small and medium enterprises (SMEs) access finance and drive job creation across manufacturing and export sectors.
Urgent Appeal to State Bank of Pakistan
Calling for decisive action, Zubair Tufail urged the State Bank of Pakistan to implement a 1 percent policy rate reduction immediately instead of waiting for the next Monetary Policy Committee meeting.
“The State Bank must respond proactively to global economic trends and domestic realities. Every day of delay costs Pakistan investment and jobs,” he concluded.
