Lahore Chamber of Commerce and Industry (LCCI) President Ijaz A Mumtaz has said that at least 300 basis point cut in policy rate is direly needed to jumpstart the trade and economic activities in the country. Existing 9.50 policy rate is not compatible with the inflation rate. He stated this in a statement issued on Wednesday.
He said that existing 3.96 percent inflation rate is the lowest rate since October 2003 but in the last monetary policy, State Bank of Pakistan announced only 0.5 percent cut in the policy rate that had never done any service to the economy and the industry.
LCCI president said that in China, policy rate is 5.60 percent, India has eight percent, Bangladesh has 7.25 percent, Sri Lanka has 6.50 percent, Singapore has 0.12 percent and Thailand has two percent while highest in Pakistan which is 9.5 percent.
He said that high policy rate is one of the biggest reasons of high input cost of the industrial sector. Resultantly, Pakistani merchandise facing hard competition in the internal market. He said that it was very unfortunate that we have failed to learn any lesson from the tighter monetary policy stance adopted by the State Bank of Pakistan in the yester years.
LCCI President said that ongoing economic scenario shows that there is hardly any time left for economic managers of the country and they all should understand well that industry and economy needs minimum 3 percent cut in the discount rates.
He said "it is now before all of us that high discount rate is no more sustainable. It has been causing a great harm to economy and would continue to do so unless and until a realist approach is adopted."
He said that despite higher inflation all the major economies have either curtailed or are in the process of reducing high interest rates to protect their economies while countries like Japan and Sweden are maintaining discount rate at zero.
The LCCI president said the State Bank of Pakistan should understand that its continued tighter stance is inflicting a very heavy loss on the nation as the economy has already paid a very high price because of high interest rate.