• Monetary Policy Committee (MPC) has adjusted upwards the Monetary Policy Rate by 50 basis points to 8.50 percent.
• The decision was arrived at after taking into account the increasing inflationary pressures.
• The development is aimed at anchoring inflation expectations which is critical in restoring macroeconomic stability.

The Monetary Policy Committee (MPC) has adjusted upwards the Monetary Policy Rate by 50 basis points to 8.50 percent from 8 percent following its meetings held on the 15th and 16th February 2021.
The decision was arrived at after taking into account the increasing inflationary pressures with inflation projected to deviate from the target over the next eight quarters and the weak economic environment.
Speaking during the Monetary Policy Committee Announcement, Bank of Zambia Governor Christopher Mvunga, explained that the decision is primarily aimed at anchoring inflation expectations which is critical in restoring macroeconomic stability.
Mr Mvunga said should inflation persist above the target range of 6 to 8 percent, the Central bank stands ready to further tighten monetary policy.
“At the November meeting, the MPC decided to leave the Policy rate at 8.0 percent the decision that was informed by imbalances in the economy reflected in the contraction in the growth and weakness in the financial sector,” he said.
And Mr Mvunga said indicators of domestic economic activity point to the less severe contraction in real Gross Domestic Products (GDP) in the last half of 2020 following the partial relaxation of Covid-19 restrictions.
“Nearly all the monitored indicators in the Bank of Zambia survey of Business opinions and expectations improved over the third quarter readings,” he said.
“In addition the Stanbic Bank Zambia Purchasing Managers index also signaled a softer deterioration in the private sector business environment.”
He noted that this year the medium-term domestic real GDP is projected to recover supported by positive growth in the Mining, Electricity, Gas and water as well as information and communications sector.
Meanwhile, the Governor noted that Fiscal pressures remained high as revenue fell due to the Covid-19 shock amidst raising expenditures especially on agricultural inputs, health and clearance of arrears.
He said fiscal consolidation remains challenging given the significant uncertainty about evolution of escalating Covid-19 infections and the debt restructuring process.
“Narrowing the fiscal deficit by ramping up revenue whilst rationalizing expenditure and restructuring of government debt remain critical to restoring fiscal fitness and macroeconomic stability,” Mr Mvunga said.
“Securing external sector support will be central to this effort.”