Bank of Zambia maintains policy rate amid high inflation

Bank of Zambia decided on Wednesday to keep the policy rate at 13.5 per cent. Despite inflation exceeding the target range of 6-8 per cent, the Monetary Policy Committee (MPC) deemed the current policy stance appropriate considering recent developments.

The decision took into account the impact of the drought, previous rate hikes, increased statutory reserve ratios, and recent foreign exchange market reforms. The MPC also considered the potential effects on financial stability and economic growth in 2024 due to the drought.

Inflation averaged 14.6 per cent in the second quarter of 2024, up from 13.5 per cent in the first quarter. Annual inflation increased to 15.4 per cent in July from 15.2 per cent in June, driven by the Kwacha’s depreciation, rising food and energy prices, and supply constraints.

Attribution: Bank of Zambia Statement

Subediting: Y.Yasser