Karachi July 30, 2024: The State Bank of Pakistan announced its first monetary policy yesterday, in which the committee decided to cut the policy rate by 100 basis points to 19.5 percent.
However, the Overseas Investors Chamber of Commerce & Industry (OICCI) expressed dissatisfaction with the modest interest rate cut.
The OICCI pointed out that the inflation rate had decreased to 12.6 percent in June 2024 and argued that the interest rate could have been reduced by 3 to 5 percent. They noted that the continuous decline in inflation since December 2023 could have justified a more significant reduction. Additionally, the OICCI mentioned that the State Bank could have further reduced the interest rate in light of improvements in the current account and foreign exchange reserves. A further cut in the interest rate would also lower the government’s interest payments on domestic loans. To mitigate business challenges, the OICCI urged the State Bank to focus on further reducing the interest rate.
Federal Minister of Finance Muhammad Aurangzeb had also anticipated a further reduction in the interest rate. He added that it is ultimately the State Bank’s prerogative to decide the extent of the interest rate reduction.
