Economic Growth Predicted For Zambia

The Bank of Zambia has held its benchmark interest rate steady in anticipation of further lowering inflation and to sustain a modest economic recovery.

Governor Denny Kalyalya stated during a press conference on Wednesday that the monetary policy committee maintained the rate at 9 percent.

Dr. Kalyalya stated that the decision to remain on hold was influenced by a "sharp decline in inflation since December" as well as "some fragility" in economic development.

The strong reduction in inflation and its predicted sustained trend towards the 6-8 percent target range for the forecast period from Q1 2022 to Q4 2023 were key criteria considered by the Committee.

“However, upside risks to the inflation outlook remain. These include increase in crude oil prices, possible short term effects of the transition to cost-reflective electricity tariffs, lower crop production due to adverse weather conditions, lingering supply chain bottlenecks induced by the Covid-19 pandemic, and tightening of monetary policies in major economies in response to rising inflation,” Dr Kalyalya stressed.

According to the MPC, the economy would rise 3.5 percent in 2022 and 3.6 percent the following year.

Zambia's inflation rate fell to 15.1 percent in January, the lowest in nearly two years, from 19.3 percent in November.

Dr. Kalyalya stated that the central bank expects inflation to remain within its target range of 6% to 8% during the next eight quarters.