The Monetary Policy Committee of the Bank of Zambia has decided to maintain the Monetary Policy Rate at 9.75 percent.
Bank of Zambia Governor Dr. Denny Kalyalya said this due to the inflation rate which is anticipated to remain outside the 6 to 8 percent target range.
He said other reasons include the rising public debt, continued fragility in the financial sector, slow economic growth and low credit growth in the private sector.
Dr. Kalyalya said the committee decided not to increase the policy rate to allow for positive changes to take place in the contributing areas.
He however said the committee stands ready to revise the policy rate should any changes occur.
The Central Bank Governor made the presentation during the Monetary Policy Media Briefing in Lusaka after a Monetary Policy Committee (MPC) Meeting on the 19th to 20th November 2018.
The Central bank has also disclosed that the overnight interbank rate was maintained within the policy rate corridor through open market operations at an average rate of 9.73 % in the third quarter, two basis points below the Policy Rate.
Dr. Kalyalya says the demand for government securities has declined due to low liquidity levels and reduced participation by foreign investors. He says Subscription rates for bonds fell from 124% in the previous quarter to 32% while subscription rates for treasury bills increased from 43.3% to 68%.
“The Stock of outstanding government Securities, at K54.6 billion at the end of September 2018 was 5.4% higher than recorded at the end of June 2018. Of the total outstanding government securities, non-residents held K8.5 billion, representing 15.6% of the total stock, down from 17.0% at the end-June 2018. Almost all the government securities held by non-residents are in government bonds”, he said.