Call for Interest Rate Reduction Ahead of Monetary Policy Review

The Salt Manufacturers Association of Pakistan (SMAP) has formally requested the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) to deliberate on a substantial decrease of 3–4% in the policy interest rate. This appeal comes before the upcoming monetary policy assessment scheduled for Wednesday, July 30.

According to a statement released by SMAP, its chairperson, Saima Akhter, emphasized that “a minimum decrease of 3% in the interest rate is vital to instigate a significant and beneficial transformation in the ease of conducting business nationwide.”

SMAP founder chairman Ismail Suttar stated that the country’s consistently elevated interest rate “continues to be a major impediment to both industrial and commercial activities.”

The SMAP statement further noted Suttar’s view that a considerable reduction in the policy rate is crucial for encouraging private sector investments, revitalizing economic expansion, and paving the way for a comprehensive economic resurgence.

Suttar also expressed concerns that substantial borrowing expenses have notably restricted working capital, particularly for small and medium-sized enterprises (SMEs).

He added, “Reduced interest rates will alleviate this strain and unleash the productive potential of numerous enterprises.”

The association remarked that accessible financing would enable producers, including those in Pakistan’s salt processing sector, to allocate resources towards technological advancements, expand their operational scale, and bolster export competitiveness.

Suttar commented, “When businesses prosper, they generate employment opportunities, contribute tax revenue, and augment the gross domestic product (GDP). This represents the most enduring strategy for diminishing fiscal deficits and reinforcing the rupee’s value.”

During its previous MPC meeting on June 16, the central bank resolved to maintain the policy rate at its current level of 11%.

Analysts anticipate that the central bank might opt to lower the policy rate by 50 basis points (bps) during its forthcoming assembly on Wednesday, marking the initial MPC gathering for the fiscal year 2025–26.