LAHORE - The central bank is going to announce its Monetary Policy for the next two months on Saturday (today), while the business community has called for reduction in discount rate by at least 200 basis points in order to provide some relief to the industry and help for revival of economic activities.

The central bank’s board of directors is meeting on Saturday to finalise the monetary policy following the Advisory Committee on Monetary Policy meeting to recommend the decision to the SBP board.

LCCI former vice president Kashif Anwar suggested the rate cut to provide relief to the private sector, as all segments of the economy are presenting an improved picture because inflation is on the decline, government borrowing and current account deficit is per expectations. Moreover, remittances are posting healthy growth and reserves have risen to $13.4 billion.

He said that SBP had to make a drastic cut at least by 200 to 300 basis points in the monetary policy being announced on November 15, 2014 for two months. He said that due to highest interest rate in the region, the bank financing for industrial sector had become unaffordable.

Kashif Anwar said that unchanged or a cut of 50 to 100 basis points would not be doing any service to the dwindling economy. He said that it is very unfortunate that we have failed to learn any lesson from the tighter monetary policy stance adopted by the State bank of Pakistan in the past few years.

Pakistan Carpet Manufacturers and Exporters Association (NZ) Senior Vice Chairman Qamar Zia said that economic managers should understand well that a 50 or even 100 basis points cut would be too little. “Despite higher inflation, all the major economies have either curtailed or are in the process of reducing high interest rates to protect their economies.”

He said that the central bank should understand that its continued tighter stance was inflicting a very heavy loss as the economy had already paid a very high price because of high interest rate.

Qamar Zia said urged SBP to announce at least 200 to 300 basis points cut in markup rates in the forthcoming Monetary Policy that would certainly give some breather to the ailing carpet industry.

He further pointed out that government itself has to pay huge amount as mark-up on the loans it acquired during past seven years if the discount rate is not curtailed.

APCMA former chairman Aizaz Mansoor Sheikh said that rising foreign exchange reserves and lower inflation provide a base for minimum 150-200 basis points cut in the interest rate. “If the interest rate is not reduced, it means the government is still under the IMF pressure and taking dictation for economic policies,” he added.

Aizaz Mansoor Sheikh regretted that industry was facing unprecedented challenges due to high mark up rate and many other factors but government was not ready to facilitate industry in this respect.