Pakistan China Joint Chamber Of Commerce And Industry (PCJCCI) Urges SBP To Cut Interest Rate To 6pc

As Pakistan navigates a delicate economic recovery, the Pakistan China Joint Chamber of Commerce and Industry (PCJCCI) Monday urged the State Bank of Pakistan (SBP) to reduce the benchmark interest rate from the current 11 percent to 6 percent in its upcoming Monetary Policy announcement

LAHORE, (UrduPoint / Pakistan Point News - 28th Jul, 2025) As Pakistan navigates a delicate economic recovery, the Pakistan China Joint Chamber of Commerce and Industry (PCJCCI) Monday urged the State Bank of Pakistan (SBP) to reduce the benchmark interest rate from the current 11 percent to 6 percent in its upcoming Monetary Policy announcement.

PCJCCI President Nazir Hussain, while talking to media here, stated that with core economic indicators showing clear signs of stabilization including a significant drop in inflation and a subdued Consumer Price Index (CPI), PCJCCI believes the time is ripe for a more accommodative monetary stance to unlock the country’s full economic potential. He added that Pakistan’s macroeconomic conditions now justify a bold policy shift; Headline inflation has fallen to 4 percent, indicating improved price stability, CPI growth stands at just 0.3 percent, one of the lowest in recent years, meanwhile, the real interest rate is excessively positive, stifling borrowing, spending, and investment.

On this occasion, Senior Vice President Brig. (Retd) Mansoor Saeed Sheikh said that a policy rate of 11 percent in a 4 percent inflation environment reflects an overly conservative posture that is dampening industrial sentiment. This mismatch between inflation and interest rates is hurting Pakistan’s ability to stimulate investment, create jobs, and foster industrial growth. He emphasized that a cut to 6 percent would trigger wide-ranging economic benefits, particularly for industries, SMEs, and foreign investors.

Key sectors, textiles, agriculture, construction, and manufacturing are struggling under the burden of high borrowing costs. Lower rates would revive industrial capacity utilization, currently at historical lows, enable SMEs to access credit and expand operations, restore investor confidence in the domestic business.

Zafar Iqbal, Vice President PCJCCI, stressed that they are witnessing strong interest from Chinese companies to invest in Pakistan’s Special Economic Zones (SEZs). However, high financing costs are discouraging large-scale capital inflows. A reduced policy rate will make Pakistan significantly more competitive in the region. He added that neighboring economies have adopted far more supportive monetary policies to stimulate post-pandemic recovery, and Pakistan cannot afford to fall behind in the global race for capital and exports.

Salahuddin Hanif, Secretary General, highlighted that a reduction in interest rates would directly reduce government debt servicing costs by approximately Rs 3.5 trillion, freeing up fiscal space for social spending, infrastructure, and development priorities. This would ease pressure on the national budget, and improve credit worthiness and investor perception. It could also allow greater allocation to education, health, and digital infrastructure.

PCJCCI calls for a coherent and growth-centric policy mix, aligning monetary policy with fiscal, trade, and industrial strategies.