Business community reacts sharply to SBP’s decision to keep policy rate at 11.5%
Industry leaders expressed disappointment that the State Bank of Pakistan left the benchmark rate unchanged, warning that the high‑cost financing will curb industrial activity and SME growth.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
High policy rate stays at 11.5% curtails industrial and SME growth, so avoid buying sectoral stocks.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- BanksNegatively affected
- CementNegatively affected
- SteelNegatively affected
- TextileNegatively affected
- AutomobileNegatively affected
- PowerNegatively affected
Companies
Mentions in This Briefing
Sectors: Banks, Cement, Steel, Textile, Automobile, Power — Negative · Do not buy. PSX tickers: MEBL, MCB, UBL, HBL, BAHL, FABL. High policy rate stays at 11.5% curtails industrial and SME growth, so avoid buying sectoral stocks.
Full Story
Open on Business Recorder## SBP keeps policy rate at 11.5%
The State Bank of Pakistan (SBP) announced that the key policy rate will remain at 11.5 percent, a level the business community describes as "oppressive" and "highly contractionary."
## Industry backlash
Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the decision deprives trade and industry of the breathing space needed to revive growth. He urged the central bank to cut the rate into single‑digit territory to lower the cost of doing business.
Muhammad Ikram Rajput, President of the Korangi Association of Trade and Industry (KATI), echoed the sentiment, noting that the unchanged rate hampers industrial recovery, new investment and export performance. He highlighted additional pressures from rising production costs, high electricity and gas tariffs, and volatile petroleum prices.
## Call for monetary easing
Both leaders demanded a clear roadmap for gradual rate reduction, stressing that affordable financing is essential for SMEs, export‑oriented firms and the broader manufacturing sector. They warned that continued high borrowing costs will raise product prices, erode competitiveness, and stall job creation.
## Wider economic context
The criticism comes as Pakistan’s trade deficit widened by 18.1 percent in July‑August 2026 YoY, and geopolitical tensions in the Middle East keep global oil price outlook uncertain. The business community argues that monetary policy is the only immediate tool to support growth, yet it remains unused.
## Implications for investors
Analysts note that while banks may benefit from higher rates, the broader industrial and SME slowdown could weigh on earnings across multiple listed sectors, potentially dampening overall market sentiment.