Faheem Ur Rehman Saigol says increase in interest rates may discourage new investment, delay expansion plans, and slow down employment generation
LAHORE: (UrduPoint/UrduPoint / Pakistan Point News-April 27th, 2026) Lahore Chamber of Commerce & Industry President Faheem Ur Rehman Saigol has expressed concern over the decision of the State Bank of Pakistan to increase the policy rate by 100 basis points to 11.50 percent.
He said that at a time when businesses are already facing high energy costs, heavy taxation, and the adverse impact of regional conflict, including higher freight charges, war risk surcharges, and supply chain disruptions, the increase in interest rates would add further pressure on the industrial and commercial sectors.
He said that a higher policy rate directly raises the cost of borrowing for businesses. Industries relying on bank financing for working capital, expansion, and modernization would now face higher financial costs. He added that small and medium enterprises (SMEs), which are already facing liquidity constraints, would be affected the most.
The LCCI President said that the increase in interest rates may discourage new investment, delay expansion plans, and slow down employment generation.
He noted that export-oriented sectors may also become less competitive, as financing costs in Pakistan remain higher than many competing countries.
Faheem Ur Rehman Saigol said that higher borrowing costs could also reduce consumer demand for housing, automobiles, and other financed products, which would negatively impact related industries and overall economic activity.
He said that while controlling inflation is important, monetary tightening alone cannot address structural issues such as high energy tariffs, excessive taxation, supply-side inefficiencies, and policy uncertainty. He stressed that a balanced approach is needed to maintain price stability while also promoting growth and investment.
The LCCI President urged the government and the State Bank of Pakistan to take parallel measures for reducing the cost of doing business, improving access to finance for SMEs, and supporting exports so that economic activity is not adversely affected.
