FOR the fourth consecutive quarter, the Bank of Zambia (BoZ) has held its benchmark lending rate at nine per cent.
This is due to the projected continued downward trend in inflation and its eventual return to the six to eight per cent target range in the first quarter of 2024.
According to Central Bank Governor, Denny Kalyalya, the Monetary Policy Committee (MPC) arrived at the decision based on progress made on the debt restructuring programme under the G20 Common Framework.
Addressing journalists in Lusaka yesterday, Dr Kalyalya said this Official Creditors had paved way for the approval of the International Monetary Fund (IMF) Extended Credit Facility (ECF), which was expected to lead to the conclusion of the debt restructuring negotiations over the first half of 2023.
“Since then, there has been intensified engagement with the Committee and the private creditors with the goal of completing the debt restructuring by the first quarter of 2023,” he said.
Dr Kalyalya said this would have a positive impact on the budget, market sentiments and mitigate the upside risks to inflation, such as tighter global financial conditions, adverse effects of the Russia- Ukraine conflicts and the Covid-19 effects.
“It’s against this background that the committee decided to maintain the policy rate at nine per cent.
The decision was arrived at after careful consideration either to raise or to maintain it at nine per cent.
“In addition, the committee took into account the sluggish growth and some vulnerabilities in the financial sector,” Dr. Kalyalya said.
He however indicated that the current projection show a slightly higher inflation path than it was anticipated in the August MPC meeting.