Zambia’s central bank holds policy rate at 9.75%
Lusaka, Zambia (PANA) – The Monetary Policy Committee (MPC) of the Bank of Zambia (BOZ) has decided to maintain the policy rate at 9.75 percent
BOZ Governor Denny Kalyalya who made the announcement Wednesday in Lusaka said by maintaining the policy rate at 9.75 percent, monetary policy remains supportive of financial sector stability and economic growth.
The Bank Governor, however, said to support sustainable macro-economic stability and achieve higher growth, prompt and effective implementation of fiscal adjustment measures remains critical.
The Governor made the announcement following a two-day meeting of the Monetary Policy Committee.
Kalyalya said in arriving at the decision, the Committee took into account factors such as inflation projections which suggest that inflation will remain within the 6-8 percent target range, although close to the 8 percent upper bound of the range.
“Should the up side risks to inflation materialise and push inflation above the target range, the Committee may adjust the Policy Rate upward,” the Governor stated.
He said inflationary pressures persisted in the fourth quarter of 2018, with inflation rising to an average of 8.0 percent from7.9 percent in the third quarter.
Increase in fuel prices, the depreciation of the Zambian Kwacha against major foreign currencies and reduced supply of selected food items kept inflation at elevated levels.
In January 2019, inflation was recorded at 7.9 percent, same level as in December 2018.
The MPC observed that over the forecast period (first quarter of 2019 to the fourth quarter of 2020), inflation is projected to remain within the 6-8 percent target range although at an elevated level.
The Kwacha is reported to have depreciated by 15.3% against the US dollar, mainly on account of sustained demand for procurement of petroleum products, a relatively strong US dollar and negative market sentiment following credit rating downgrades, according to the Bank of Zambia.
The Kwacha also depreciated against the Euro, British pound and South African rand by13.2 percent,13.9 percent and13.7 percent, respectively.
The depreciation was largely attributed to the currencies relatively lower depreciation against the US dollar
Preliminary estimates indicate over the three quarters of 2018, real GDP growth averaged 3.9 percent, slightly higher than 3.6 percent recorded during the same period in 2017.
-0- PANA MM/VAO 20Feb2019
