The Bank of Zambia (BOZ) has maintained the Monetary Policy Rate (MPR) at 9.0 percent.
Speaking during the Monetary Policy Committee Announcement and Press Briefing attended by the Zambian Business Times-ZBT, Bank of Zambia Governor Dr. Denny Kalyalya said the decision to maintain the MPR at 9.0 percent is due to the continued deceleration in inflation and its projected further decline towards the target range of 6-8 percent by end of 2023.
Dr. Kalyalya said other factors the Monetary Policy Committee (MPC) considered include the positive efforts in implementing fiscal consolidation measures, relatively weaker growth prospects over the medium term, as well as lingering vulnerabilities and risks to the financial sector.
He explained that over the next eight quarters, inflation is projected to continue trending downwards towards single digits and it is projected to drop to 8.9 percent in 2023 noting that underlying these projections are mostly the effects of enhanced fiscal consolidation anchored on the resolution of the external debt overhang supported by an International Monetary Fund Extended Credit Facility.
Dr.Kalyalya added that these effects combined are expected to boost market confidence, anchor inflation expectations, positively impact macroeconomic stability and ultimately contribute to growth that has remained subdued for some time.
The Governor however noted that upside risks to the inflation outlook include increases in global energy and food prices, exacerbated by the on-going Russia-Ukraine conflict, outbreaks of more infectious strains of COVID-19,tighter global financial conditions and the projected grain deficit in some of Zambia’s neighboring countries.
Dr. Kalyalya mentioned that decisions on the policy rate will continue to be guided by inflation forecasts, outcomes and identified risks including those associated with financial stability.
