APBF Calls for Policy Rate Cut to Support Businesses and Economic Recovery

By Dr Ansab Ali | Lahore, Pakistan
LAHORE: The All Pakistan Business Forum (APBF) has expressed strong disappointment over the State Bank of Pakistan’s (SBP) decision to keep the policy rate unchanged at 10.5 percent, calling it a missed opportunity to provide much-needed relief to businesses and revive economic activity.
In a statement, APBF leadership said that despite clear signs of easing inflation and improving external indicators, the central bank’s decision to maintain the status quo would continue to put pressure on industrial growth, investment, and export competitiveness.
APBF President Syed Maaz Mahmood said the business community had high expectations of a policy rate cut during the first Monetary Policy Committee meeting of 2026, particularly as inflation has declined significantly and macroeconomic stability has improved. He noted that keeping the interest rate unchanged goes against market expectations and the harsh ground realities faced by traders, manufacturers, and exporters.
“The cost of borrowing in Pakistan remains prohibitively high, discouraging business expansion, modernization, and new investment at a time when the economy urgently needs momentum,” he said.
Syed Maaz Mahmood added that while the SBP acknowledged improved growth prospects and stabilizing inflation, it failed to translate these positives into a pro-growth monetary policy decision. He pointed out that industries are already struggling with high energy tariffs, rising input costs, and subdued global demand, and that the continuation of a double-digit policy rate further aggravates these challenges.
APBF Chairman Ibrahim Qureshi echoed similar concerns, stating that the SBP’s cautious approach may safeguard short-term price stability but risks slowing down economic recovery. He argued that the real policy rate remains excessively restrictive in light of current inflation trends and that a reduction would not have threatened macroeconomic stability.
Qureshi noted that many regional economies have already shifted toward accommodative monetary policies to support growth, while Pakistan continues to lag behind. He warned that prolonged high interest rates could lead to further contraction of small and medium enterprises (SMEs), which form the backbone of the national economy.
The APBF leadership urged the SBP to reconsider its stance in upcoming policy meetings and move swiftly toward bringing the policy rate into single digits. They called for a meaningful cut of at least 100 basis points to restore business confidence, stimulate private-sector credit, and unlock stalled investments.