After Maintaining the Monetary Policy Rate (MPR) at 9.75 % since February 2019 in a bid to keep inflation in a target range of 6 to 8 %, the Bank of Zambia (BOZ) has increased the MPR to 10.25%.
BOZ governor Dr. Denny Kalyalya says inflation is projected to breach the target range.
Dr. Kalyalya says the decision to increase the policy rate was arrived at to counter the projected inflationary pressure and support macroeconomic stability further noting that the outlook looks positive in the long term.
He said the Monetary policy committee also considered the slow progress in the implementation of fiscal adjustment measures by the government, weak growth in credit to the private sector tight fiscal conditions as a result of debt servicing and the anticipated slowdown in economic growth.
The Governor explains that “Inflation is projected to remain outside the upper bound of the 68% target range over the forecast horizon.
Key upside risks to inflation outlook include: Lower maize output; Continued elevated fiscal deficits; High debt service payments; and, Decline in international reserves.
These risks are likely to impact inflation through the supply-side as well as exchange rate and expectations channels.”