The Economic Policy and Business Development (EPBD) think tank strongly criticized the Monetary Policy Committee’ decision to keep the policy rate unchanged at 11 percent, and rated it “poor decision” that imposes the heaviest burden on taxpayers in the region.
Chairman of the think tank and former caretaker federal minister, Gohar Ejaz in a post on X, formerly known twitter said that the State Bank of Pakistan (SBP)’s monetary policy committee should have cut interest rate by 150 basis points. He said that maintaining policy rate at 11 percent was equivalent to placing burden of highest interest rates in the Region on honest and frustrated taxpayers.
He maintained that Pakistan’s fiscal deficit could be controlled by aligning the interest rate with inflation. “Sustainable economic growth is only possible when businesses are provided with a level playing field,” he added.
Ejaz underscored the need for a decisive monetary policy to spur economic recovery, warning that the current stance was hampering private sector growth.
Highlighting regional comparisons, he pointed out that inflation in Pakistan currently stands at around 3 percent, while the policy rate is 11 percent. By contrast, India has inflation of 1.5 percent with an interest rate of 5.5 percent, and Bangladesh has inflation of 8.3 percent with an interest rate of 10 percent.
“Pakistan has the highest interest rate in the region despite having low inflation,” he noted, stressing that such a policy undermines competitiveness and discourages investment.