Zambia’s central bank on Wednesday raised its monetary policy rate by 50 basis points as part of efforts to bring down the inflation rate which has persistently remained in the double-digit range.
The Bank of Zambia (BoZ) said the rate has been increased from 8.5 percent to 9.0 percent.
Denny Kalyalya, the central bank governor, said the increase, the second this year, was meant to steer the inflation to a single digit of between 6-8 percent as stated in the 2022 national budget.
“This decision will help to anchor inflation expectations. The committee also took into account the need to continue supporting economic growth and maintaining financial stability,” he told reporters during a press briefing to announce the outcome of the Monetary Policy Committee meeting.
The central bank chief said although inflation was projected to decelerate sharply over the forecast horizon, it will still be above the upper bound of the 6-8 percent target range, adding that the upside risks to the inflation outlook include the predicted COVID-19 fourth wave, possible increase in fuel pump prices and electricity tariffs.
According to him, effective implementation of the anticipated fiscal reforms will significantly complement the achievement of a low and stable inflation objective.
The country’s annual inflation rate was recorded at 22.1 percent last month.
He, however, said the economy was projected to rebound after recording negative growth in 2020 on the back of strong performance in the agriculture, information and communication, as well as wholesale and retail trade sectors.
In 2022 and 2023, the growth is expected to rise to 3.5 percent and 3.7 percent, respectively, he added. Enditem