BoZ maintains policy rate at 9.75 percent

THE Bank of Zambia (BOZ) has maintained the monetary policy rate at 9.75 percent. BOZ Governor Dr Denny Kalyalya said decisions on the policy rate would continue to be guided by inÁation forecasts and outcomes as well as progress in the execution of fiscal consolidation measures. He said this yesterday at a press briefing in Lusaka. “Should the heightened risks to inÁation materialise, an upward adjustment in the policy rate may be necessary to prevent inÁation from persistently staying above the target range,” he said. Monetary policy is the process by which the Bank of Zambia controls either the cost of very short-term borrowing or the monetary base, often targeting an inÁation rate or interest rate to ensure price stability and general trust in the Kwacha. Dr Kalyalya said the decision to maintain the monetary policy rate was made at a meeting held by Monetary Policy Committee (MPC) on Monday. Dr Kalyalya said in arriving at the decision, the Committee took into account the continued low economic growth and low private sector credit growth. Other factors included sustained high fiscal deficits, rising public debt and external debt service payments, and continued fragilities in the financial sector as reÁected in non-performing loans. “As some of the upside risks identified in the $ugust MPC meeting materialised, inÁation continued to rise and ended the third quarter just below the upper bound of the target range. $nnual overall inÁation rose to 7.9 percent in September 2018 from . percent in -une , largely reÁecting higher prices of some food items and depreciation of the Kwacha against 8S dollar,” he said. In 2ctober, annual overall inÁation rose to . percent. Dr Kalyalya also explained that consistent with the monetary policy stance, the overnight interbank rate was maintained within the policy rate corridor through appropriate open market operations.