The Bank of Zambia (BOZ) has maintained the monetary policy rate at nine percent for the second time this year.
BOZ Governor Denny Kalyalya says the decision has been arrived at following a sharp decline in inflation over the past quarters and positive fiscal consolidation measures by Government.
Dr. Kalyalya notes that the drop in the country’s inflation rate is likely to continue to the projected single digit of between 6 to 8 percent target ranges by the end of 2023.
The BoZ Chief said this during the Monetary Policy Committee Announcement in Lusaka today.
Dr. Kalyalya also explained that the global economy has continued to be affected by the Russia-Ukraine Conflict and that this has dimmed prospects for robust economic growth.
He disclosed that the country’s domestic economic activities slowed down in the first quarter of the year and noted a slight recovery in April, 2022 but that it was minimal.
The Central Bank Governor said the enhanced fiscal consolidation by Government is expected to yield positive economic gains for the country but that this is dependent on the country resolving its debt crisis, with the support of the International Monetary Fund Extended Credit Facility.
Dr. Kalyalya said interest rates in the first quarter of 2022 remained broadly unchanged and that the commercial banks’ average nominal lending rate stood at 26 percent.
He said there was improved fiscal performance in the first quarter of 2022 on account of high revenue collections particularly from the mining sector.
Dr. Kalyalya also points out that the months of import cover reduced to 3.6 from 4.4 months at the end of March, 2022 and that this was as a result to an upward revision of projected imports for the year.
He said the Kwacha depreciated by 3.7 percent against the dollar on account of excess demand for foreign exchange, mainly for importation of petroleum products.