BoZ ACTS TO REDUCE INFLATION
TO contain the continued rising inflation rate, the Bank of Zambia (BoZ) has adjusted upwards the benchmark for pricing money in the market by 50 basis points for the next three months.
The decision to raise the monetary policy rate to 8.5 percent from eight percent where the central bank kept it for six months, is also meant to restore macroeconomic fundamentals.
The annual Inflation rate for January 2021 stood at 21.5 percent.
Creating a balance and supporting economic recovery was delicate, complex and difficult for the Monetary Policy Rate Committee, says BoZ Governor, Christopher Mvunga.
Mr Mvunga said the economy had been contracting and needed to recover especially from the inflation pressure.
Mr Mvunga stressed that the central bank stood ready to tighten the policy rate should the conditions in the market not change.
Meanwhile, Mr Mvunga said fiscal pressures remained high as revenue fell due to the Covid-19 shock amid rising expenditure especially on agricultural inputs, health and clearance of arrears.
"Fiscal consolidation remains challenging given the significant uncertainty about the evolution of escalating Covid-19 infections and the debt restructuring process.
"Narrowing the fiscal deficit by ramping up revenue whilst rationing expenditure and restructuring of Government debt remain critical to restoring fiscal and macroeconomic stability," Mr Mvunga said.