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KARACHI: Industry leaders warn that further tightening of monetary policy may significantly reduce private-sector economic participation, as high borrowing costs have already limited access to credit.
The State Bank of Pakistan has assured the visiting International Monetary Fund (IMF) mission, which concluded its discussions on the upcoming budget on Thursday, that it will maintain a tight monetary policy to contain inflation, but the impact on economic growth was not considered.
At its last monetary policy review on April 27, the SBP raised its policy rate by 100 basis points to 11.5 per cent after keeping the rate steady for almost two years, citing an upsurge in inflationary pressures driven by the war in the Middle East, a move that was widely criticised by the trade and industry.
The high cost of money has made the private sector reluctant to borrow from banks.
