FPCCI opposes possible interest rate hike, urges SBP to ease borrowing costs

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday opposed a possible increase in Pakistan's policy interest rate, warning that higher borrowing costs would hurt businesses, industrial production and economic growth.

FPCCI President Atif Ikram Sheikh said the current policy rate of 11.5% was already placing pressure on businesses and urged the State Bank of Pakistan (SBP) to adopt a business-friendly monetary policy.

His remarks came ahead of the SBP's Monetary Policy Committee (MPC) meeting scheduled for October 26.

Why is FPCCI opposing an interest rate increase?

FPCCI argues that borrowing costs are already too high for Pakistani businesses and that a further increase would make financing more expensive. The chamber believes lower interest rates would encourage companies to invest, expand production and create jobs, while helping industries compete more effectively in international markets.

Sheikh said an increase in interest rates would raise business and production costs, add to inflationary pressures and make credit more expensive for the private sector, restricting commercial activity.

Pakistan's economy needs affordable financing rather than more expensive credit, he said, calling for a gradual reduction in borrowing costs to support economic recovery.

Lower borrowing costs could encourage investment

The FPCCI president said lower interest rates would enable businesses to undertake new investments and expand their operations.

He argued that cheaper financing would improve the private sector's ability to borrow, encourage industrial investment, boost production and create employment opportunities.

Sheikh also stressed the importance of providing industries with financing at competitive interest rates to increase exports and strengthen Pakistan's competitiveness in international markets.

FPCCI urges business-friendly monetary policy

The FPCCI president called on the central bank to pursue a monetary policy that supports industry, investment and sustainable economic growth.

He maintained that gradually reducing interest rates, rather than increasing them further, would help businesses manage costs and expand economic activity.

The SBP has maintained its policy rate at 11.5% since increasing it by 100 basis points in April 2026.

The central bank's next monetary policy decision is scheduled for October 26, with the business community seeking relief from existing borrowing costs.