RAWALPINDI: The Rawalpindi Chamber of Commerce and Industry (RCCI) has criticised the State Bank’s decision to raise interest rates, arguing the move will choke exports just as a ceasefire in the Middle East had begun to ease pressure on fuel and shipping costs.

The SBP’s Monetary Policy Committee has recently raised the benchmark policy rate by one percentage point to 11.5pc, citing the need to “anchor inflation expectations” after the rupee weakened and oil prices jumped during three weeks of Iran-Israel hostilities.

RCCI President Usman Shaukat called the hike “unfavourable for business and industrial growth” at a time of global uncertainty. He said the private sector had expected the bank to hold rates after an Islamabad brokered truce between United States and Iran last month raised hopes of regional stability.

“The private sector is under immense strain. This decision will further increase the cost of doing business, discourage investment and hurt export competitiveness,” Mr Shaukat said in a statement.

With bank spreads, working capital now costs manufacturers over 14pc, according to the chamber.

Exporters say each one percentage point increase in the policy rate cuts textile margins by roughly 0.8 percentage points.

The central bank said inflation had risen due to conflict-linked fuel and transport costs, and that a tight stance was needed to prevent second-round effects. The rupee fell 1.8pc against the dollar between April 1 and April 19.

The RCCI urged the government and SBP to “review and reconsider” the stance and bring the rate below 10pc once the regional situation stabilises, citing earlier commitments to the business community. Pakistan’s key rate has remained in double digits since April 2023. Large-scale manufacturing contracted 0.8pc in the first eight months of FY26, official data shows.

Published in Dawn, April 29th, 2026