LCCI Voices Concern Over SBP Decision to Keep Policy Rate UnchangedHigh interest rates to slow investment and industrial growth, says Faheem ur Rehman Saigol

By Farzana Chaudhry
Lahore, Pakistan
LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has expressed serious concern over the State Bank of Pakistan’s (SBP) decision to maintain the policy rate at 10.5 percent, stating that the move has disappointed the business community and weakened investor confidence at a critical phase of economic recovery.
In a joint statement, LCCI President Faheem ur Rehman Saigol, Senior Vice President Tanveer Ahmad Sheikh, and Vice President Khurram Lodhi said the decision came as a surprise, as markets were widely expecting a rate cut in light of easing inflation and improving macroeconomic indicators. They noted that inflation has remained within the target range and the Pakistani rupee has shown relative stability, creating sufficient space for a meaningful reduction in the policy rate.
LCCI President Faheem ur Rehman Saigol said that maintaining a high interest rate will continue to restrict private sector investment, slow industrial activity, and discourage new business ventures. He added that industries in Pakistan are already burdened with high energy costs, taxation, and compliance requirements, while expensive financing has further intensified their challenges.
He pointed out that high borrowing costs have made access to credit unaffordable, particularly for small and medium enterprises (SMEs), which form the backbone of the national economy. According to him, SMEs are unable to expand or modernize due to costly loans. He emphasized that a reduction of at least 150 to 200 basis points was necessary to stimulate business growth and generate employment.
The LCCI leadership further noted that many regional economies are offering significantly lower interest rates, making Pakistan less competitive for both domestic and foreign investors. They warned that without a substantial cut in the policy rate, industries may postpone expansion plans or divert investments to other markets. The SBP’s decision, they said, has created uncertainty and sent a negative signal to investors.
They stressed that lower interest rates are vital to boosting exports, increasing industrial output, and supporting the government’s broader economic revival agenda. Without easing the monetary policy stance, they cautioned, economic growth would remain slow and fragile.
The LCCI management urged the State Bank of Pakistan to reconsider its monetary policy position in the next Monetary Policy Committee (MPC) meeting and adopt a more growth-oriented and business-friendly approach. They emphasized that a timely and significant reduction in the policy rate is essential to restore business confidence, attract investment, and place the economy on a sustainable growth trajectory.