The State Bank of Pakistan’s decision to leave the benchmark policy rate unchanged at 11.5% has triggered mixed reactions from the country’s business sector. While some industry groups are pressing for cheaper credit to encourage investment and revive manufacturing, others believe maintaining the current rate is the safer option given inflation risks and uncertainty in international energy markets.
The contrasting views reflect the challenge policymakers face in balancing economic growth with financial stability.
Industry Wants Cheaper Financing
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has criticized the decision to keep interest rates unchanged, saying businesses continue to operate under difficult conditions.
FPCCI President Atif Ikram Sheikh argued that the economy needs a stronger push toward investment and industrial activity. The business community, he said, had expected the central bank to bring the policy rate into single-digit territory.
Lower interest rates could reduce the cost of bank financing for companies and give manufacturers greater capacity to invest in production, technology and expansion. FPCCI believes the existing rate is instead adding to the cost of doing business and making an already challenging environment more difficult.
The trade body’s concerns also come amid an 18.1% increase in the trade deficit during July and August 2026 compared with the same period a year earlier.
Sheikh pointed to expensive electricity, higher petroleum prices, geopolitical developments and costly financing as major obstacles facing the industrial sector.
Manufacturers Also Seek Rate Cuts
The Korangi Association of Trade and Industry (KATI) shares many of these concerns.
KATI President Muhammad Ikram Rajput said elevated borrowing costs were restricting the recovery of industrial businesses. He argued that expensive credit was affecting not only existing operations but also decisions regarding fresh investment and export-oriented production.
For manufacturers, a reduction in interest rates could make working capital more affordable and encourage companies to expand their businesses rather than postpone investment plans.
Investors Take a More Cautious View
The Overseas Investors Chamber of Commerce and Industry (OICCI), however, has welcomed the State Bank’s decision.
The chamber considers the 11.5% rate a reasonable position under the current circumstances. It noted that inflation and core inflation remain areas requiring attention, while international commodity markets continue to present risks.
OICCI also highlighted improvements in Pakistan’s foreign exchange reserves and strong remittance inflows. With industrial activity recovering at different speeds across sectors, the chamber believes that keeping the rate unchanged offers businesses greater certainty.
However, it stressed that monetary policy cannot solve all of the economy’s structural problems. The chamber called for better fiscal management, more competitive energy prices, predictable tax policies, faster processing of tax refunds and reforms to improve the overall business environment.
RCCI Points to International Pressures
The Rawalpindi Chamber of Commerce and Industry (RCCI) has also endorsed the rate decision.
RCCI President Usman Shaukat highlighted the impact that geopolitical tensions in the Middle East could have on global inflation and energy prices. Any sustained increase in international fuel prices could have a significant effect on Pakistan because the country relies on imported energy.
In this environment, RCCI believes that keeping monetary policy steady can help protect the economic stability achieved over the past two years.
Growth Versus Stability
The split among business organizations illustrates the difficult choices confronting Pakistan’s economic managers.
Industrial groups want immediate relief through lower interest rates, arguing that businesses cannot achieve meaningful growth while financing remains expensive. They see monetary easing as a way to stimulate investment, production and exports.
Meanwhile, groups supporting the rate hold are concerned that a premature reduction could reignite inflation, particularly if global fuel and commodity prices rise further.
The debate therefore goes beyond the 11.5% figure itself. It is essentially about how Pakistan can encourage stronger economic growth without undoing the progress made toward macroeconomic stability.
What Comes Next?
The future direction of interest rates will likely depend on inflation trends, external-sector developments, global energy prices and the pace of domestic economic recovery.
For businesses, however, lower borrowing costs are only one part of the solution. Stable energy prices, a predictable tax regime, timely refunds and broader structural reforms will also be crucial if Pakistan wants to attract investment and strengthen its industrial base.
The business community may disagree on whether the policy rate should be cut today, but there is broad agreement on one point: Pakistan needs stronger investment and sustainable industrial growth to create lasting economic momentum.