Islamabad: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) recently urged the State Bank of Pakistan (SBP) to reduce the key policy rate by 400 basis points — with the initiative aimed at facilitating the country’s economically hard-hit industries, a news source reported.
FPCCI Vice President Sheikh Sultan Rehman sent a letter to SBP Governor Reza Baqir, in which he stated that the estimates indicated that inflation number would drop below 5% and a rise in prices due to supply shocks would not support a second inflation wave. He added that there was also no external risk due to rescheduling of foreign debt, disbursements under RFI, and reduction in current account deficit.
Highlighting these facts, Rehman asked the SBP to gradually decrease the interest rates as both import-based and demand-driven inflation were in check. He said that due to these positive developments, the SBP should immediately cut the key policy rate by 400 basis points instead of bringing down the interest rate to 5% percent, in stages, until August.
The FPCCI vice president further requested the SBP to instruct banks to revise KIBOR rates monthly instead on quarterly or biannually. He indicated that the measure would allow the companies, struggling to survive, enjoy the benefits of lower rates. He explained that there would only be an insignificant impact on bank deposits as most were demand deposits and not time-based ones.
Furthermore, Rehman also requested the SBP to cover an extra mile during the prevailing tough times and do as much as possible to provide financial support to struggling businesses.
