LCCI not happy over SBP’s decision to keep policy rate at 10.5%

2026-01-26 - 12:49

The Lahore Chamber of Commerce and Industry has expressed concerns over the State Bank of Pakistan’s decision to maintain the policy rate at 10.5 per cent. The move has disappointed the business community and weakened investor confidence at a critical stage of economic recovery. LCCI President Faheem ur Rehman Saigol, Senior Vice President Tanveer Ahmad Sheikh and Vice President Khurram Lodhi said that the decision came as a surprise as markets were widely expecting a rate cut in view of easing inflation and improving macroeconomic indicators. They said inflation has remained within the target range and the rupee has shown stability, which provided enough space for a meaningful reduction in the interest rate. They urged the SBP to review its monetary policy stance in the next MPC meeting and adopt a more business-friendly and growth-oriented approach. They emphasised that a sharp and timely reduction in the policy rate is crucial to restore business confidence, attract investment and put the economy on a sustainable growth path. LCCI President said that keeping the interest rate high will continue to restrict private sector investment, slow down industrial activity and discourage new businesses. He stated that Pakistan’s industries are already facing high costs of energy, taxation and compliance, and expensive financing has further added to their difficulties. He said that high interest rates have made borrowing unaffordable for businesses, especially for small and medium enterprises. He said SMEs are the backbone of the economy but are unable to expand or modernise due to costly loans. He stressed that a reduction of at least 150 to 200 basis points was required to support business growth and employment generation. He stated that many regional countries are offering much lower interest rates, making Pakistan less competitive for local and foreign investors. He warned that without a strong cut in the policy rate, industries may delay expansion plans and shift investments elsewhere. He said the SBP’s decision has created uncertainty in the market and sent a negative signal to investors. He added that lower interest rates are essential to boost exports, increase industrial output and support the government’s economic revival efforts. Without easing monetary policy, he said, economic growth will remain slow and fragile. SBP keeps key policy rate unchanged at 10.5%