Demanding competitive interest rate at neighbouring countries’ level, the Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel has opposed the central bank for keeping the monetary policy rate unchanged at 7% for the sixth time in a row, despite declining inflation and positive economic growth.

FPCCI’s Businessmen Panel chairman Mian Anjum Nisar observed that keeping the key policy rate at 7% doesn’t seem to be logical despite the fact that inflation has dropped to 8.9% amidst a reduction in headline inflation and core inflation, which are expected to go down further.

He said the results of the cut in policy rate from 13.5% to 7% percent are very positive in the form of 3.94pc economic growth. He asked the SBP Governor to fulfil his commitment to maintaining an accommodative monetary stance in the near and long-term to support the rare recovery amid uncertain Covid-19 challenges.

Mian Anjum Nisar said that in view of the policy rates in neighbouring countries Pakistan’s 7 percent interest is very high, and its reduction is essential to make the Pakistani exporting sector as well as the local industry competitive. He said that after the Corona devastation, Pakistan should take advantage of those export orders cancelled by the other regional countries. For this, the government will have to reduce the production cost of the industries to avail this offer by the international buyers.

The BMP Chairman and FPCCI former President said that future anticipated inflation would further decline due to low demand amidst the fourth wave of coronavirus. On the other hand, the external front is also presently sustainable due to foreign financial support and rescheduling of debt, he added.

He said that the central bank should announce an initiative related to loans for small and medium enterprises (SMEs), as the SME sector has to show collateral to banks, which are always reluctant to offer them concessional credit.

He termed the 7% key policy rate as insufficient, especially in the extraordinary prospects amidst fear of worldwide trade and industrial lockdowns in the fourth wave of pandemic.

He suggested promoting the present growth pace further growth in the industrial and service sectors through lowering of mark-up rate, as the economy is on track, with declining inflation and stability on external and domestic fronts.

The PCCI former president said that achievements in exports and stabilization of the economy through the monetary policy measures now require to sustain again by extending reduction in the policy rates so that the debt liability of the business sector is compensated through lower mark-up rate.

Mian Anjum Nisar said that the State Bank’s keeping the discount rate unchanged at 7% is not understandable when it also expresses satisfaction over declining inflation and rising growth, saying the risks to the outlook for both growth and inflation appeared balanced.