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Bank of Zambia Governor Dr. Denny Kalyalya said the inflation rate in the country was in a deceleration trend. He was explaining the rationale for maintaining the Monetary Policy Rate (MPR) at 9.0 percent. According to him, inflation would further decelerate and move towards the target range of 6-8 percent by end of 2023
Bank of Zambia Governor Dr. Denny Kalyalya said the inflation rate in the country was in a deceleration trend. He was explaining the rationale for maintaining the Monetary Policy Rate (MPR) at 9.0 percent. According to him, inflation would further decelerate and move towards the target range of 6-8 percent by end of 2023.
The Monetary Policy Committee (MPC), which recently met considered positive efforts in implementing fiscal consolidation measures, the Governor informed. The country will experience relatively weaker growth prospects over the medium term. During this time, the economy would have the risk of being vulnerable to financial disruptions. Over the next eight quarters, inflation is projected to continue trending downwards to single digits. It is projected to drop to 8.9 percent in 2023 thanks to enhanced fiscal consolidation. The external debt management supported by an International Monetary Fund Extended Credit Facility is another factor that can help stem the inflation.
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Dr.Kalyalya added that these effects combined, besides reining in inflation, are expected to boost market confidence, impact macroeconomic stability, and ultimately contribute to growth. The southern African country has been experiencing subdued growth for some time.
The Governor, however, noted that increases in global energy and food prices, exacerbated by the ongoing Russia-Ukraine conflict, outbreaks of more infectious strains of COVID-19, tighter global financial conditions, and the projected grain deficit in some of Zambia’s neighbouring countries could stoke financial disruptions and could act as a drag on the growth prospects.
