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The Central Bank of Zambia has raised its cash reserve ratio by 300 basis points to 14.5% both on foreign and local currency. It is a move to curb inflationary pressure in the wake of elevated price pressures. The Southern African nation grapples with a persistent currency slide leading to cost-push effects.
The Central Bank of Zambia has raised its cash reserve ratio by 300 basis points to 14.5% both on foreign and local currency. It is a move to curb inflationary pressure in the wake of elevated price pressures. The Southern African nation grapples with a persistent currency slide leading to cost-push effects.
The headline inflation of Zambia was 12.6% for October, a steep jump from 10.8%. The Bank of Zambia in its last monetary policy communique forecasted price pressures that would keep the consumer price index above the 6-8% target band until the first half of 2025 due to exogenous factors like rising crude prices and acrimonious development in geopolitics in the Middle East.
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The BOZ hiked the statutory reserve ratio 250 bps to 11.5% earlier in the year, in response to a kwacha currency slide. Two weeks later the central bank raised its benchmark interest rate 50 bps to 9.5%. The sterilization measure will total the years’ adjustments to 550 bps to 14.5% in addition to 100 bps adjustment to 10% but with one more rate decision meeting to be held in the third week of November.
