• Economist anticipates an upward revision of the Monetary Policy Rate.
• Decision will be based on two factors.
• Tightening of the policy rate will create more confidence in the Zambian economy.
An Economist anticipates an upward revision of the Monetary Policy Rate (MPR) by the Monetary Policy Committee (MPC) in the announcement to be made this week given the conditions the economy is facing.
Dr Patrick Chileshe told Money FM News in an interview, that the decision will be based on two factors which include the increase in the annual inflation rate that stood at 21.5 percent last month and the fact that the inflation rate is expected to rise further this month owing to challenges in the supply of food items on the market.
“It’s anticipated that the Central Bank will start unwinding the loose Monetary Policy that they have been undertaking, so we are anticipating the Bank of Zambia to revise the Monetary Policy Rate upwards based on two factors,” Dr Chileshe said.
Dr. Chileshe noted that the other reason why the Central Bank will decide to tighten the MPR is to guarantee value for the Kwacha that has been depreciating against major currencies for some time now.
“If you have seen very well in the recent past, the Zambian Kwacha has been depreciating for quite a while now, which could be attributed to a number of reasons,” he said.
He however explained that the tightening of the policy rate will create more confidence in the Zambian economy and may help to stabilize the Kwacha because it will have a positive impact on the inflation rate.
Dr Chileshe said as long as the Zambian Kwacha remains week, the annual inflation rate will keep increasing.
The Monetary Policy Committee (MPC) is this Wednesday expected to announce the Monetary Policy Rate (MPR) for the first quarter of the year.