Bank of Zambia raises policy rate to 10.25% from 9.75%
Written by newsroom on May 22, 2019
By Clinton Masumba, Kitwe
The Bank of Zambia has raised the policy rate from 9.75% to 10.25% to help counter inflationary pressure and support macroeconomic stability.
Bank of Zambia Governor Dr Denny Kalyalya has made the announced at a media briefing in Lusaka stating that the move is essential for sustained and higher economic growth.
He said to actualize the prospects; there is need to for urgent implementation of other corrective policy measures that set fiscal deficits, debt levels and debt service payment on a sustainable path.
Dr Kalyalya has further indicated that addressing rising domestic arrears will also reduce non-performing loans and strengthen the ability of financial institutions to provide credit to the private sector.
He added that annual overall inflation declined to an average of 7.7% in the first quarter of 2019 from 8.0 in the fourth quarter of 2018 mainly on account of improved supply of some food items and reduction in domestic fuel pump process.
Dr Kalyalya said commercial banks’ lending rates increased largely in the first quarter of 2019 on account of the rise in the cost of funds and higher yield rates on government securities.
Meanwhile, Dr Kalyalya has attributed to demand related to petroleum imports, reduced supply of foreign exchange and negative market sentiments the weakening of the local currency.