FNB Zambia Head of Treasury Ignatius Kashoka has indicated that the Bank of Zambia (BOZ) is expected to start increasing the monetary policy rate at its third meeting of the year, which takes place this week.
According to information made available to the Zambian Business Times-ZBT, Kashoka said the expected interest rate increments may be aimed at curbing inflation pressure should be done in a manner that does not stifle growth adding that it should not be steep and sudden.
“The current inflation-GDP dynamic that is upside pressure on prices and steady growth, suggests that if the central bank is to achieve a ‘soft landing’ for the economy, it should start to increase the policy rate at its third meeting of the year which takes place this week”, he said.
Kashoka added that increments in policy rate should be implemented steadily over a period of time.
He however mentioned that consideration for lower interest rates could see the Central Bank hold rates once more, as it will need to balance between curtailing price pressures and maintaining an accommodative interest rate environment.
“An accommodative interest rate environment is key in complementing the fiscal consolidation efforts by the fiscal authorities to encourage private sector-led economic growth. Our view, for now, is that the Central Bank could hold rates for the upcoming sitting”, Kashoka added.
