The Bank of Zambia (BOZ) has increased the Monetary Policy Rate from 9-percent to 9.25 percent.
BOZ Governor DENNY KALYALYA says the decision was underpinned by projections that inflation is moving away from 6-8 percent target range which had been projected in November last year.
Dr. KALYALYA says inflation is now projected to average 11.1 percent this year from November projections of 8.5 percent.
He says inflation has been moving away from the target range because of factors such as the depreciation of the Kwacha, increase in electricity tarrifs and projected drop in crop production owing to floods and army worms.
Announcing results of the Monetary Policy Committee in Lusaka today, Dr. KALYALYA however stated that the measures are not expected to affect the financial sector.
Dr. KALYALYA also projected positive economic growth in the medium term.
On the forex market, the Governor noted that the Kwacha has continued to depreciate owing to low supply of forex due to reduced inflow from the mines in terms of mineral royalty and other taxes.
He said BOZ has over time offloaded receipts from the mines to support the market of upto 443.5-million dollars in addition to the 333.5-million dollars provided in the third quarter of last year.
Meanwhile, Dr. KALYALYA stated that the delayed restructuring of debt has contributed the depreciation of the currency as previous suppliers of forex now coming into the market to demand forex.
He says some players are scared of being affected by the restructuring.
The Governor noted the urgent need for determination of the debt restricting as government has made strong presentation on the creditors on the matter.