KARACHI: While foreign investors appear satisfied with the State Bank of Pakistan’s decision to keep its policy rate at 11.5 per cent, local businessmen have criticised the cautious approach, which they believe will stifle economic activity and hinder access to finance.

Overseas Investors Chambers of Commerce and Industry (OICCI) Secretary General M Abdul Aleem views SBP’s decision as prudent and balanced, reflecting improved macroeconomic conditions while acknowledging that inflation and external risks remain elevated.

The pause provides breathing space for businesses, especially as private sector credit is picking up and economic activity showed signs of recovery in June, including in automobiles, cement, fertiliser offtake and business sentiment, he said.

However, inflation at 11.1pc in June remains above the 5-7pc target range, while risks from global commodity prices, Middle East tensions, food prices and possible fiscal slippages require caution, he added.

OICCI supports status quo, FPCCI calls it contractionary

While terming the SBP’s decision as ‘contractionary,’ Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Acting President Saquib Fayyaz Magoon warned that keeping the benchmark interest rate at an elevated level will severely undermine industrial revival efforts.

The business community was expecting some reduction to help bring down the exorbitant cost of doing business and to cope with the economic challenges, but maintaining the status quo in the current economic scenario is a setback for the industry and exporters, who are already battling elevated energy tariffs and sky-high financing costs.

“We cannot run industries or compete in global markets under such punishing financial burdens. A single-digit interest rate is absolutely critical right now to lower production costs, make goods and services more affordable, and effectively kick-start the economy,” Mr Saquib said.

Korangi Association of Trade and Industry President Muhammad Ikram Rajput said the high policy rate could further slow the recovery in industrial activity, investment and exports.

Amid growing geopolitical tensions in the Middle East, he said concerns over rising global crude oil prices and external economic uncertainties cannot be ignored and Pakistan’s domestic economic indicators present an equally challenging picture.

Escalating production costs, higher electricity and gas tariffs, and the recent trend of daily increases in petroleum prices have placed severe pressure on the industrial sector, he added.

Persistently high interest rates are discouraging fresh industrial investment, delaying capacity expansion and constraining production, while export-oriented industries are steadily losing their competitiveness in international markets, he said.

Markaz-e-Anjuman Tajiraan Chairman Kashif Chaudhry said it is necessary to bring down the policy rate to the single digit for reviving economic and trading activities, luring investors and opening new job avenues.

He said high interest rates will keep additional burden on the fragile economic activities which are already under pressure over the US-Iran war, uncertain crude oil prices, daily fixing of local petroleum prices, high shipping/freight rates and inflated power and gas rates.

Published in Dawn, July 28th, 2026