KARACHI (Special Correspondent) – The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) today, 26 October 2026, strongly denounced the State Bank of Pakistan’s (SBP) latest decision to increase the policy rate by another 0.5 percent, which brings the benchmark policy rate to a regionally-uncompetitive 12%. Mr. Atif Ikram Sheikh, President of the FPCCI, expressed profound concern and disapproval, asserting that this FPCCI denouncement highlights severe threats to ongoing economic stabilization efforts and industrial expansion.

Key Points

• The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) strongly denounced the State Bank of Pakistan’s 0.5% policy rate hike.
• The benchmark policy rate has risen to a regionally uncompetitive 12 percent.
• FPCCI President Atif Ikram Sheikh labeled the monetary tightening measure as counterproductive.
• High interest rates are severely crippling domestic manufacturing and private sector growth.
• FPCCI has urged the government and SBP to immediately reduce the policy rate to single digits.

FPCCI Calls Rate Hike Counterproductive

Mr. Atif Ikram Sheikh, representing the apex body for trade, industry, and commerce across Pakistan, maintained that the FPCCI has termed the monetary tightening measure as counterproductive. He warned that it deals a severe blow to ongoing economic stabilization efforts, dampens industrial expansion, and further erodes the global export competitiveness of Pakistani products in international markets.

Denouncing the central bank’s decision, Mr. Sheikh stated that further inflating the cost of borrowing is a step in the wrong direction. This comes at a time when local manufacturers and commercial enterprises are already grappling with unprecedented operational overheads, soaring utility tariffs, and severe liquidity constraints. He emphasized that at a crucial juncture where businesses desperately require affordable credit accessibility and economic stimulus to spur domestic production, sustain operations, and generate vital employment opportunities, tightening monetary policy further suffocates private sector growth and paralyzes investment sentiment.

Impact on Businesses and Inflation Drivers

Mr. Atif Ikram Sheikh pointed out that sustained high interest rates have fundamentally transformed borrowing from a business enabler into an unsustainable financial liability. The FPCCI Chief explained that these tight monetary policies have crippled domestic manufacturing instead of curbing inflation. He highlighted that inflation has largely been driven by structural supply-side bottlenecks, escalating energy costs, and fiscal anomalies, rather than excess aggregate demand.

Consequently, cost-push inflation continues to run rampant because the underlying drivers of inflation are non-monetary in nature. Raising interest rates therefore penalizes productive industries without achieving price stability, effectively driving formal businesses toward operational closures or scaling down operations.

Urgent Call for Single-Digit Policy Rates

Reiterating FPCCI’s firm and consistent stance, the organization strongly urged the government and the central bank to immediately recalibrate their monetary framework and bring the policy rate down to single digits. Mr. Atif Ikram Sheikh stressed that single-digit interest rates are an absolute prerequisite to make credit affordable for trade, small and medium enterprises (SMEs), and large-scale manufacturing alike. Without reasonable financing costs, local enterprises cannot upgrade their technology, invest in value addition, or compete effectively against regional competitors whose borrowing costs remain significantly lower.

He added that high interest rates also place an unmanageable debt-servicing burden on the national exchequer and private borrowers, creating a vicious cycle of fiscal distress and stagnant economic output. The FPCCI President said that the apex body strongly urges the central bank, the federal government, and economic policymakers to adopt a pro-growth, forward-looking monetary stance. Authorities must align interest rates with regional benchmarks and prioritize comprehensive, institutionalized consultations with the business community before rolling out policies that directly impact national economic output, he concluded. Brig Iftikhar Opel, SI (M), Retd., Secretary General of FPCCI, endorsed these views.

Frequently Asked Questions

Why did FPCCI denounce the SBP policy rate hike?

The FPCCI denounced the SBP policy rate hike, calling it counterproductive, as it exacerbates operational costs for businesses, dampens industrial expansion, and erodes export competitiveness without effectively curbing cost-push inflation.

What are the impacts of high interest rates, according to FPCCI?

According to FPCCI, high interest rates transform borrowing into an unsustainable liability, cripple domestic manufacturing, suffocate private sector growth, paralyze investment sentiment, and create an unmanageable debt-servicing burden.

What changes is FPCCI recommending to the government and SBP?

The FPCCI is recommending that the government and SBP immediately recalibrate their monetary framework to bring the policy rate down to single digits, align interest rates with regional benchmarks, and prioritize consultations with the business community.