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ISLAMABAD: Pakistan’s central bank is expected to keep its key interest rate unchanged at 11 percent when its monetary policy committee meets on Sept. 15, a Topline Securities survey showed this month, with 72 percent of respondents forecasting no move.

The State Bank of Pakistan (SBP) began cutting its policy rate from a record 22 percent in June 2024, delivering a total of 10 percentage points of easing by January 2025. It paused at 12 percent in March, cut further in May to 11 percent, and has held the rate steady through June, July and August amid inflation concerns and flood-related risks.

The policy rate is the main tool used by the SBP to control inflation. A higher rate makes borrowing more expensive and slows demand, while lower rates can spur growth but risk fueling price increases.

“Looking at current market conditions and inflation outlook, we believe the SBP will maintain the policy rate at 11 percent in the upcoming monetary policy,” Topline Securities said in its report.

Still, 28% of respondents in the survey predicted another reduction, ranging from a modest 25 basis points (0.25 percentage points) to a full 100 basis points.

Topline warned that the devastation of the 2010–2011 floods — Pakistan’s worst on record, which submerged a fifth of the country and cut rice production by about 30 percent — showed how climate disasters can fuel food inflation. 

“The area under cultivation of wheat, rice and cotton fell between 3 and 18 percent,” the brokerage noted, adding that this year’s ongoing floods could trigger similar supply shocks.

Market signals also reflect expectations of stability. The 6-month KIBOR — a key interbank lending rate — and yields on short-term government securities have shown little change since the last SBP meeting, suggesting traders see no imminent shift.

Topline projects average inflation of 6–7 percent in fiscal year 2026 and expects gradual cuts later, bringing the policy rate to around 10 percent by mid-2026 once flood-related pressures subside.

Pakistan remains under a $7 billion International Monetary Fund program that emphasizes maintaining prudent monetary policy alongside reforms to stabilize the currency and strengthen transparency.

ISLAMABAD: Pakistan’s flood crisis moved downstream on Monday, with Sindh province warning that more than 300,000 people could be hit this week as surging river waters sweep south from neighboring Punjab.

Punjab, the country’s most populous province and agricultural heartland, has borne the brunt of the disaster since late August. Officials there say 60 people have died, millions displaced and vast tracts of farmland destroyed after weeks of monsoon rains and controlled water releases from Indian dams, which authorities there carry out to manage reservoir levels during heavy rains.

Floodwaters are now racing down the Indus basin, fed by Punjab’s three eastern rivers — the Chenab, Ravi and Sutlej — which have been swollen by weeks of heavy rains and dam releases in India. As the torrents merge into the Indus, Pakistan’s longest river, the surge is expected to hit Sindh this week, threatening towns and farmland along the river’s southern course before it empties into the Arabian Sea.

“The protection of people’s lives and property is the Sindh government’s top priority, and the provincial government stands with the people at all times,” Sindh information minister Sharjeel Inam Memon said in a statement.

He said 133,887 people and 380,363 animals had already been shifted to safe locations, while the most dangerous flood situation was at Panjnad, where the Chenab and Sutlej rivers meet, and at Trimmu, a key headworks on the Chenab in central Punjab.

President Asif Ali Zardari, whose Pakistan Peoples Party governs Sindh, also urged institutions to remain on high alert.

“Provincial, district and local government institutions should be on alert to deal with possible flood situation,” his office said.

PUNJAB DEVASTATION

Speaking to reporters on Monday, Punjab’s information minister Azma Bokhari said the province had shifted 2.147 million people and 1.55 million animals to safer places, with more than 4.2 million people in total affected since the latest spell of monsoon rains and flooding began in late August.

“Overall, 4,335 areas have been affected [by floods] and from this, you can estimate its severity,” she said.

Bokhari added that the province’s farmland had been hit hard, with about 1.84 million acres under cultivation destroyed, including rice, sugarcane, cotton and vegetables.

Punjab Relief Commissioner Nabeel Javed said the scale of the disaster had forced authorities to set up 412 relief camps, 492 medical camps and 432 veterinary camps across flood-hit districts. 

Javed added that Mangla Dam was now 88 percent full and Tarbela at 100 percent, while India’s Bhakra, Pong and Thein dams across the Sutlej and Ravi were between 90 and 99 percent full.

“Unfortunately, 60 people have died in this flood,” he said, adding that Chief Minister Maryam Nawaz had directed officials to compensate citizens for losses.

Rescue 1122 said operations were continuing in Multan, a major city in southern Punjab that sits near the confluence of the Chenab and Sutlej rivers and lies directly in the path of floodwaters moving toward Sindh. In Multan alone, more than 10,800 people have been rescued so far, including 2,343 in the past 24 hours, while the district administration has already carried out advance evacuation of 350,000 people and 300,000 animals, according to Rescue Punjab spokesperson Farooq Ahmed.

He said residents of Muzaffargarh, a district squeezed between the Indus and Chenab rivers, and Alipur Jatoi, a tehsil of Muzaffargarh lying on the Indus floodplain, had also been urged to evacuate from high-risk riverbank communities before the surge moves downstream.

The Provincial Disaster Management Authority (PDMA) reported extremely high flows across Punjab’s rivers on Monday, including 543,579 cusecs at Trimmu Headworks on the Chenab and 564,604 cusecs at Panjnad on the Sutlej.

The agency warned of more “severe thunderstorm rains” across Punjab in the next 24 hours after Jhelum recorded 96mm of rainfall, Jhang 77mm and Noorpur Thal 70mm. It cautioned of flash flooding in Dera Ghazi Khan until Sept. 9.

The National Disaster Management Authority (NDMA) said the nationwide death toll from rains and floods since June 26 when the monsoon season began had reached 910.

The Pakistan Meteorological Department forecast further urban and coastal flooding through Sept. 10 as the monsoon’s 10th spell continues.