The Monetary Policy Rate was raised by the Bank of Zambia (BOZ) from 9 to 9.25 percent.
The decision, according to BOZ Governor DENNY KALYALYA, was supported by predictions that inflation is moving out of the target range of 6 to 8 percent that had been predicted in November of last year.
Inflation is now anticipated to average 11.1 percent this year, up from November’s forecasts of 8.5 percent, according to Dr. KALYALYA.
According to him, the depreciation of the Kwacha, rising energy rates, and the anticipated decrease in crop production due to floods and army worms are just a few of the variables that have caused inflation to deviate from the planned range.
However, Dr. KALYALYA noted that the banking sector is not anticipated to be impacted by the measures when announcing the Monetary Policy Committee’s findings in Lusaka today.
In the medium term, Dr. KALYALYA predicted that the economy will grow favorably.
The Governor mentioned that the Kwacha has continued to lose value on the forex market due to a lack of foreign exchange due to a decrease in input from mines in terms of mining royalties and other levies.
In addition to the 333.5 million dollars contributed in the third quarter of last year, he said that over time, BOZ had offloaded receipts from the mines amounting to up to 443.5 million dollars to support the market.
In the meantime, Dr. KALYALYA claimed that the delayed debt restructuring has contributed to the currency’s devaluation because former forex providers are now entering the market to place orders for forex.
He claims that several players are afraid of the reorganization having an impact on them.
The Governor made notice of the pressing necessity to decide on debt restriction as the administration had presented a compelling case to creditors over the issue.