Home Business and Technology BoZ maintains Monetary Policy Rate at 8.5 percent

BoZ maintains Monetary Policy Rate at 8.5 percent

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Bank of Zambia says Zambia’s economic conditions have worsened

The Bank of Zambia -BoZ- has maintained its Monetary Policy Rate at 8-point 5 percent for this quarter.

BoZ Governor Christopher Mvunga attributes the decision to continued inflationary pressure in the economy.

Mr. Mvunga says the Central Bank has decided to maintain the policy rate in recognition of existing vulnerability in the financial sector.

He says despite inflation remaining above the targeted 6 to 8 percent range, pressure is expected to ease faster than anticipated, owing to improved supply of food following a good crop harvest and higher than expected copper prices.

Mr. Mvunga however says the bank will not hesitate to tighten the economy by adjusting the policy rate if the anticipated growth is not achieved within the target period.

He says the policy rate decisions will be made on the back of economic fundamentals and implementation of fiscal adjustment measures in line with the economic recovery program.

The Bank of Zambia Chief adds that the increase in the policy rate in the last quarter saw reduced borrowing by the private sector but increased local borrowing by government which has stopped looking outside the country.

Speaking during the quarterly briefing in Lusaka today, Mr. Mvunga however stated that domestic economic activity indicators point to weaker growth in the first quarter following the outbreak of the second wave of Covid-19 among others.

He nevertheless noted that business index in the country points to increased business confidence.

Mr. Mvunga further said constrained fiscal space continues to pose risk to growth outlook.

He said government securities saw an increase in demand mainly from foreign investors because of increased interest rates, further reflecting a sign of increased confidence in the country.

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