Foreign investors back SBP's rate hike to 12%, local businesses warn of higher costs

Foreign investors backed the State Bank of Pakistan’s decision to lift its policy rate by 50 basis points to 12%, while domestic business groups warned on October 27 that borrowing costs could slow industrial activity and exports. The Overseas Investors Chamber of Commerce and Industry said the increase would help contain inflation and support economic stability as energy prices and geopolitical uncertainty rise.

Local business representatives, including the Federation of Pakistan Chambers of Commerce and Industry and Karachi Chamber of Commerce and Industry, argued that costly finance would discourage investment and add pressure to manufacturers and exporters. OICCI cited large-scale manufacturing growth of 1.9% in July-August and a 14.1% year-on-year expansion in private-sector credit, and called for policy measures addressing energy tariffs, taxation and other supply constraints. Textile exporters also warned that higher working-capital costs could weaken their international competitiveness.