LUSAKA — The Bank of Zambia announced that the Monetary Policy Committee (MPC) at its November meeting decided to raise the Monetary Policy Rate (MPR) by 50 basis points to 9.0 percent.
Speaking at a media briefing in Lusaka, Bank of Zambia Governor Dr Denny Kalyalya said the decision was arrived at in a quest to help steer inflation to single digits in 2022.
The move is also meant to maintain inflation within the 6-8 percent target range by mid-2023 as revealed in the 2022 budget address.
Dr Kalyalya said the committee also took into account the need to continue supporting economic growth and maintaining financial stability.
“Although the inflation is projected to decelerate sharply over the forecast horizon, it shall be above the upper bound of 6-8 target range,” he explained.
“The upside risks to inflation outlook include the possible increase in fuel pump price and electricity tariffs necessary to restore fiscal sustainability as well as the predicted fourth wave of Covid-19 that could disrupt supply chains,”.
Dr Kalyalya also noted that the Kwacha which had been on the depreciating trend weakening by 7.1 percent in the year to June 2021, appreciated by 25.9 percent between July 1 and September 30, 2021 to 16.78 per US dollar.
He added that this was on the back of improved market sentiments and sustained supply of exchange particularly from mining companies and foreign investors in government securities.