The State Bank of Pakistan (SBP) has announced its latest monetary policy, reducing the benchmark interest rate by 1%, bringing it down from 12% to 11% for the next two months. The move comes amid mounting pressure from the business community and economic experts to ease borrowing costs and stimulate industrial activity.

Prior to the announcement, sources had hinted at a possible cut of 1 to 2 percentage points to help revive investment and reduce the cost of doing business. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) had urged the central bank to bring the interest rate into single digits to attract new investment and energise the economy.

Prominent industrialist Zaki Ejaz had emphasised the need for a minimum 500-basis-point cut, warning that high interest rates had already brought industrial borrowing to a virtual halt.

On the other hand, financial analyst Atique-ur-Rehman had advocated for maintaining the current rate, citing the importance of monetary stability for sectors like pharmaceuticals that rely on imported raw materials. He stressed the urgent need for investment in key sectors such as ports, fisheries, processing units, and agro-livestock farming, which depend on financial stability.

Atique also pointed out that senior citizens, welfare institutions, and pensioners, whose incomes are tied to long-term savings, depend on a steady interest rate to meet their daily needs. He noted that the IMF has continued to push Pakistan toward maintaining a tight monetary stance, while expected foreign financial inflows have yet to materialise.

Experts agree that any policy rate movement directly impacts market sentiment, inflation, exchange rates, exports, and borrowing trends. The SBP’s latest decision will play a critical role in determining the direction of the country’s economy in the coming months.