Karachi, May 29, 2019: Pakistan Weaving Mills Association’s Chairman, Yousuf Yaqoob has expressed his dismay over the spike in SBP Policy Rate from 6.0 percent to 12.25 percent by 150bps since January 2018 when the State Bank began raising interest rates, it has more than doubled, making this one of the sharpest cycles of monetary tightening in Pakistan’s history under the PTI’s Government.
He said that the industrialists were expecting that the new SBP Governor will reduce the already high-interest rate, however, instead of reducing the rate, he has raised it, which will hamper the domestic industrial production.
Yousuf Yaqoob, PWMA’s Chairman demanded from the State Bank of Pakistan to publish on its website the minutes of the proceedings of the Monetary Policy Committee’s meeting in order to have greater transparency and to clarify its monetary policy stance to the general public.
According to Yousuf Yaqoob, the latest hike in interest rate, as well as the devaluation of the rupee, would halt the industrialization particularly the textile-related industries would be unable to import machinery and export their products. PWMA Chairman also maintained that with this rise in the interest rate the local industrialists and exporters would be further in competition against their rivals who enjoy the leverage of low-interest rate in their respective countries. He was of the view that the increased policy rate would discourage new investment as well as add pressure on the economy, besides an increase in inflation.
In the longer term, the investment will be blocked and the SBP’s decision is not good for businessmen as the increase in interest rate will further raise the cost of doing business in the country, he added.