Reduction in interest rate essential to make exporting sector competitive.

LAHORE -- The Federation of Pakistan Chambers of Commerce and Industry's ruling group has raised concern over keeping monetary policy rate unchanged at 7% for the third consecutive time, however, hailed the SBP's indication of maintaining its accommodative monetary stance in the near-term to support the rare recovery amid uncertain Covid-19 challenges.

The FPCCI's ruling party, BMP Chairman Mian Anjum Nisar said that in view of the policy rates in neighbouring countries Pakistan's 7 percent interest is very high, and its reduction is essential to make Pakistani exporting sector as well as the local industry competitive. He said that after the Corona devastation, Pakistan should take advantage of those export orders canceled by the other regional countries. For this, the government will have to reduce production cost of the industries to avail this offer by the international buyers.

Mian Anjum Nisar said that future anticipated inflation would further decline due to low demand amidst the second wave of coronavirus. On the other hand, the external front is also presently sustainable due to foreign financial support and rescheduling of debt that has supported reduction in current account deficit, he added. He termed the 7% key policy rate as insufficient, especially in the extraordinary prospects amidst fear of worldwide trade and industrial lockdowns.

Mian Anjum Nisar said that the State Bank's keeping the discount rate unchanged at 7% is not understandable when it also expresses satisfaction over declining inflation and rising the growth, saying the risks to the outlook for both growth and inflation appeared balanced.

FPCCI former president, referring to the central bank reports, observed that most economic activity data and indicators of consumer and business sentiments have shown continued improvement.

On the inflation front, recent out-turns are also encouraging, suggesting a waning of supply-side price pressures from food. He said that inflation is expected to fall further within the previously announced range of 7-9% for FY21 and trend toward the 5-7% target range over the medium-term.

He said the trajectory of the Covid pandemic is difficult to predict, given still-elevated global cases, the emergence of new strains, and lingering uncertainties about the roll-out of vaccines worldwide.

'The trade and industry needs continued support from the government in the form of lower interest rate amidst such external shocks, he suggested.

He...