Zambia’s central bank said on Wednesday (July 31) its Monetary Policy Committee has decided to leave the policy rate unchanged at 9.75% for August after raising it by 25bps in each of the previous two months. The MPC said it has weighed the inflationary risks and decided to retain its tight monetary policy stance so that the central bank’s end-year inflation target of 6% can be met. It noted that the main risks to the inflation target stem from continued cost push pressures largely associated with pass-through effects of the depreciation of the kwacha, while further inflationary pressures may arise from demand pull factors in the coming months.
On the other hand, lower food prices due to seasonal improvement in supply and the waning effects of the recent removal of fuel subsidies would exert downward pressure on inflation.
Zambia’s annual inflation rate stood at 7.3% in July, at the same level as in June, after accelerating from 6.5% in April to 7% in May following the removal of subsidies for fuel and corn farmers in May.
The next meeting of the Committee to review the Bank of Zambia Policy Rate will be held at the end of August 2013.
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