APBF calls for lower policy rate to support businesses

ISLAMABAD
The All Pakistan Business Forum (APBF) has expressed strong disappointment over the State Bank of Pakistan’s decision to maintain the policy rate at 10.5 percent, terming the move a missed opportunity to provide much-needed relief to businesses and revive economic activity. APBF leadership said that despite clear signals of easing inflation and improving external indicators, the central bank’s status quo stance would continue to strain industrial growth, investment, and export competitiveness.
APBF President Syed Maaz Mahmood said the business community had pinned high hopes on a reduction in the policy rate during the first Monetary Policy Committee meeting of 2026, especially as inflation has eased significantly and macroeconomic stability has improved. He stated that keeping the interest rate unchanged runs counter to market expectations and ground realities faced by traders, manufacturers, and exporters. According to him, the cost of borrowing in Pakistan remains prohibitively high, discouraging expansion, modernization, and new investments at a time when the economy needs momentum.
Syed Maaz Mahmood pointed out that while the SBP acknowledged improved growth prospects and stabilising inflation, it failed to translate these positives into a pro-growth monetary decision.
He said industries are already grappling with high energy tariffs, rising input costs, and weak demand in global markets, and the continuation of a double-digit policy rate further compounds these challenges.
He stressed that lower financing costs are essential for businesses to remain competitive, particularly in export-oriented sectors facing tough competition from regional peers with much lower interest rates.
APBF Chairman Ibrahim Qureshi echoed these concerns, stating that the central bank’s cautious approach may protect short-term price stability but risks undermining economic recovery.
He argued that the real policy rate is excessively restrictive given current inflation trends and that a reduction would not have jeopardised stability. Instead, he said, a timely rate cut could have stimulated private-sector credit, boosted industrial output, and supported job creation.
Qureshi highlighted that many regional economies have already shifted toward accommodative monetary policies to support growth, while Pakistan continues to lag behind.
He warned that prolonged high interest rates could lead to further contraction in small and medium enterprises, which form the backbone of the economy. He also noted that reduced business activity ultimately affects tax revenues, undermining fiscal targets and limiting the government’s ability to fund development spending.
The APBF leadership urged the SBP to reconsider its stance in upcoming meetings and move swiftly toward bringing the policy rate into single digits. They called for a meaningful cut of at least 100 basis points to restore business confidence and unlock stalled investments. According to them, inflationary risks can be managed through coordinated fiscal measures rather than relying solely on tight monetary policy.
Both leaders emphasised that sustainable economic growth requires a balanced policy mix that prioritises productivity, exports, and employment. They reaffirmed APBF’s commitment to engaging with policymakers but stressed that without immediate monetary relief, Pakistan’s businesses will continue to struggle, delaying the country’s broader economic recovery.