The economy is showing some positive indicators while inflation has also shrunk substantially and these are the ideal times that State Bank of Pakistan should bring down interest rate to single digit level in forthcoming review of monetary policy for November-December 2009 to provide a breathing space to the country’s ailing sectors. This was said by Zahid Maqbool, President, Islamabad Chamber of Commerce & Industry (ICCI) in a statement.

He said the main objective of maintaining tight monetary policy was to control inflation and widening fiscal & current account deficits. However, now the inflation has come down from record high of 25 percent in October 2008 to below 10 percent in October 2009; country’s forex reserves have mounted to above 14 billion dollars in November 2009 from 6.5 billion dollars in November 2008 while the current account deficit has also posted a decline of 89 percent to 462 million dollars in the first quarter of current fiscal year.

Therefore, this is the right time that government should make hefty cut in policy rate to provide some relief to the business community for enabling them to lift the economy out of depressed conditions, he added. He said the tight monetary policy has been one of the main reasons of widening economic inequalities in different sectors of the economy causing closure of many industrial units, slowing down industrial activities and impeding credit facilities for employment generating activities through promotion of industrial investment.

Zahid Maqbool said cutting interest rate to single digit level will produce multiple benefits for the economy. It will lower the cost of doing business, give a strong boost to business and industrial activities, provide easy credit and loaning facilities to trade & industry,  promote better investment & exports and generate more tax revenue for the government.