Body representing big corporates against steep cut in interest rates urges SBP to take cautious approach

PBC calls for balanced monetary policy amid concerns over economic stability

KARACHI: In light of increasing pressure for significant interest rate reductions, the Pakistan Business Council (PBC) has urged the State Bank of Pakistan (SBP) to exercise caution in its forthcoming monetary policy decision. The PBC emphasizes the importance of a measured approach to avoid potential spikes in import-driven demand that could negatively affect the current account and exchange rate stability.

PBC Chief Executive Ehsan Malik highlighted that the monetary policy announcement, set for Monday, should consider the International Monetary Fund’s (IMF) expectations regarding unrestricted imports and market-driven exchange rates. He pointed out that the Monetary Policy Committee must take into account the year-on-year inflation data for October, which has shown an increase compared to September, as well as rising month-to-month Consumer Price Index (CPI) inflation in both urban and rural areas. Malik also noted that further power tariff hikes are anticipated under the IMF’s guidelines.

He expressed concerns that while Pakistan has benefited from lower fuel costs, ongoing tensions in the Middle East could jeopardize this advantage. Malik stressed the necessity for alignment between monetary and fiscal policies, stating, “Tax targets outlined in the budget are not being met, primarily due to demand compression. Reducing the policy rate is not the only solution for stimulating demand.” He reminded that the SBP has a range of tools at its disposal, including adjustments to cash reserves and consumer loan limits, which can be applied selectively to address the current economic challenges.

Monitoring Desk
Monitoring Desk
Our monitoring team diligently searches the vast expanse of the web to carefully handpick and distill top-tier business and economic news stories and articles, presenting them to you in a concise and informative manner.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Must Read

Water Week 2024: Ahsan seeks global support to combat Pakistan’s climate-related...

ISLAMABAD: Minister for Planning, Development and Special Initiatives Professor Ahsan Iqbal on Monday highlighted Pakistan’s vulnerability to climate change-related disasters, calling for global support...