The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly rejected the State Bank of Pakistan’s decision to raise the policy rate by 1 percent, warning that the move could severely hurt industrial activity and push parts of the economy toward stagnation.
FPCCI President Atif Ikram Sheikh termed the decision ill-timed and damaging, arguing that it comes at a stage when the economy was beginning to stabilise after recent improvements.
He said the business community had repeatedly cautioned against further monetary tightening, stressing that high borrowing costs are already placing heavy pressure on industries and exporters. According to him, Pakistan needs supportive monetary and fiscal policies to sustain recovery rather than contractionary measures.
The FPCCI stated that elevated interest rates directly undermine the government’s goals of boosting exports, creating jobs, and restoring industrial competitiveness. It warned that Pakistani products are already struggling to compete in regional and global markets due to rising costs.
Sheikh further noted that inflation in Pakistan is largely driven by energy prices and structural supply chain issues, and argued that increasing interest rates will not address these factors. Instead, he said, it will raise the cost of doing business, restrict private sector credit, and accelerate industrial decline.
Senior Vice President Saquib Fayyaz Magoon highlighted that small and medium enterprises would be the hardest hit, as tighter financial conditions would further limit access to affordable financing. He warned that rising energy tariffs and compliance costs, combined with higher interest rates, could push several firms toward defaults or shutdowns.
Vice President and Regional Chairman Sindh Abdul Mohamin Khan added that industries in the province are already operating under stress, with many units running below capacity. He cautioned that the latest rate increase could lead to layoffs, halted expansion plans, and cancelled orders in the coming months.
The FPCCI has urged the Prime Minister, Finance Minister, and SBP leadership to reconsider the current monetary stance and instead focus on reducing energy costs, lowering the cost of borrowing, and broadening the tax base to support sustainable growth.
