Monetary policy dashes businessmen' hopes to ground

KARACHI - President FPCCI Sultan Ahmad Chawla has expressed his serious concern over monetary policy statement of the Governor State Bank of Pakistan. He said that the State Bank of Pakistan has issued only statement to continue the present monetary policy.
In fact, it was mere information not a policy statement. Business community has been expecting the significant reduction in the interest rate as it is a consensus recommendation by the economists that monetary policy should be eased to control the adverse effect of the recession.
Chawla indicated that the joint recommendations of the CACCI, that to reduce the adverse effects of recession on trade and production activities, monetary authorities should ease the monetary policies by reduction of interest rates, enhancing trade financing facilities and other expansionary measures.
It is notable that presently interest rate in Pakistan is the highest in the world. Currently market interest in India is 3 percent, in US 0.2 percent, in UK 0.6pc, in Japan 0.4pc and in Pakistan it is 13pc. Banking spread in Pakistan is 7.35 percent which is the highest in the world.
Chawla showed disappointment on the structure of newly formed Monetary Policy Committee. The industry is the largest participant in the bank deposits and financing activities has no representation in the newly formed committee. He demanded that 50 percent of the members of the monetary policy formation committee should be taken from the private sector through nomination by the industry representative.