In the context of falling inflation, the State Bank of Pakistan is under increasing pressure to call an emergency monetary policy meeting and revise interest rates.
Ahead of the release of the latest inflation data, the central bank had announced to keep interest rates at 22 percent at its meeting on April 29.
Industry and commerce called for higher interest rate cuts after inflation as measured by the Consumer Price Index eased to 17.3 percent.
Most financial experts expected interest rates to be cut this week, but were surprised to see the central bank’s overly cautious stance.
Industry and trade have criticized the central bank for not cutting interest rates, as this has increased production costs and made their products uncompetitive.
However, after recent inflation data has once again emboldened stakeholders to demand a cut in interest rates from the government, sources in the financial sector said the business community is pressuring the government to let the central bank Persuading the policy to reduce the rate.
A senior banker criticized that it is illogical that the State Bank would cut interest rates to 22 percent when inflation is 29 percent but not change the policy rate when inflation has come down to 17.3 percent after a recession.
The banker said interest rates are 4.7 percent higher than inflation, so there is clearly scope for a reduction.
Analysts predicting a rate cut said the central bank should call an emergency meeting and review the decision to keep interest rates at 22 percent.
