Faraz-ur-Rehman Cautions Against Potential Policy Rate Hike Amid Inflation Worries
Faraz-ur-Rehman, former Chairman of the Korangi Association of Trade and Industry (KATI), has raised concerns regarding the government’s potential move to increase the State Bank of Pakistan’s (SBP) policy rate. This action would be in line with commitments made to the International Monetary Fund (IMF), should the country face renewed inflationary pressures or external financial challenges.
Referring to the IMF’s recent report, titled “2024 Article IV Consultation and Request for an Extended Arrangement under the Extended Fund Facility,” Faraz-ur-Rehman emphasized that the global lender advised Pakistan to remain cautious about reducing the policy rate unless there is clear evidence that core inflation is slowing and inflation expectations have stabilized.
Faraz-ur-Rehman warned that any rise in the SBP’s policy rate would have serious consequences for businesses and the economy, potentially slowing growth. He urged the government to prioritize inflation stabilization and the promotion of economic activity, warning that stringent measures could adversely affect both industries and consumers.
