The Bank of Zambia has increased the Monetary Policy rate by 150 basis points from 11.0 % to 12.5%.
Bank of Zambia Governor Denny Kalyalya says the decision to increase the Monetary Policy rate was due to the increased inflation that continues to move away from the desired target band of 6 – 8 %.
Speaking during a media briefing in Lusaka today, Dr. Kalyalya said the committee also took into account the stability of the financial sector and importance of robust growth over the medium to long term.
“Rising the Monetary Policy rate is necessary to reduce inflation and move it to the desired band”, said Dr. Kalyalya.
He said that the persistent depreciation of the kwacha against major currencies, as well as elevated food and fuel prices continued to push inflation up in the fourth quarter of 2023.
Meanwhile, Dr. Kalyalya said that the huge demand of the US dollar on the market has been a major contributor for the depreciation of the kwacha.
He said that the demand on the currency, coupled with the low production in the mining sector, have put pressure on the kwacha.
