Zubair Tufail Urges SBP to Cut Policy Rate by 4–5% to Boost Economic Revival

Karachi : President of the United Business Group (UBG) and former President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), Zubair Tufail, has called on the State Bank of Pakistan (SBP) to reduce the policy rate by 4 to 5 percentage points in the upcoming monetary policy announcement scheduled for July 30. He urged that the rate be brought down to single digits to support economic recovery and boost industrial activity.

Tufail emphasized that the current policy rate of 11% is not only the highest in the region but also a major hurdle for the business community, especially at a time when inflation has dropped to record lows. “A policy rate below business community expectations will not be effective in reviving the economy,” he said.

Citing data from the Pakistan Bureau of Statistics, Tufail noted that the inflation rate stood at just 0.3% in April 2025, down from 0.7% in March. “In this context, the real interest rate in Pakistan is extremely high, which discourages investment, stifles production, and limits job creation,” he stated.

He pointed out that Pakistan’s interest rate remains significantly higher than other regional economies. For comparison, the policy rate in India is 6.0%, Bangladesh 10.0%, Vietnam 3.0%, and Thailand recently cut its rate to 1.75%. “These countries are actively supporting their business sectors, while in Pakistan, industries are struggling under the weight of unsustainable borrowing costs,” he added.

Tufail expressed concern over the growing challenges faced by small and medium enterprises (SMEs), which he described as the backbone of the economy. “SMEs and exporters are facing severe difficulties due to the high cost of financing. This is damaging their global competitiveness and curbing their growth potential.”

He criticized the SBP’s current monetary stance as being out of sync with the country's immediate economic needs and stressed that only a substantial reduction in the interest rate would enable industrial and export sectors to realize their full potential. “We strongly urge the SBP to cut the policy rate by 4 to 5 percentage points to bring it into single digits. This is essential to stimulate economic growth, generate employment, and attract both domestic and foreign investment,” Tufail concluded.