Bank of Zambia Governor Dr Denny Kalyalya said the decision has been made to help arrest the effects of inflation which stands at 13.8 percent, among other factors.
Speaking at a media briefing, Dr Kalyalya said the increase of the MPR has been made after a subject of intense discussions.
“The committee decided at the meetings held yesterday and previously May 13th to raise the policy rate by 100 basis points to 13.5 percent. This was informed by a number of factors. Even at 13.5 percent, you realise that it is below the inflation which is 13.8 percent," he said.
Dr Kalyalya explained that the Committee noted that inflation has continued to move away from the target band of six to eight percent aimed at, adding that there is a persistent rise in inflation expectations which if left unchecked can undermine macro-economic stability and efforts towards robust and sustained economic growth.
“This decision should not be taken in isolation. It is taken as a complement or supplement to earlier actions that we as a monetary authority, along with fiscal authorities have been implementing, so everything that we do is connected,” he said.
Dr Kalyalya said in the first quarter of 2026, inflation is projected at 7.4 percent.
“The Committee noted that the current drought has led to a significant downgrade of domestic growth forecast for 2024 to 2.3 percent from the earlier projection of 4.4 percent by the Ministry of Finance and National Planning, with agriculture and energy (electricity supply) being the most adversely affected sectors.
The drought has also necessitated the importation of significant amounts of the staple food and electricity, leading to a projected deterioration in the current account," he said.
(Mwebantu, Wednesday, May 15th, 2024)
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