Q FM Africa's Modern Radio
The Bank of Zambia Monetary Policy Committee which met on 11th February, 2015 has decided to maintain the Policy Rate at the current level of 12.5% in order to mitigate potential external shocks following the recent deterioration in the external sector performance.
The MPC’s expectation is that this policy stance will help in entrenching the gains achieved on the inflation front so far while at the same time continuing to support the Government’s growth objective.
According to a statement issued to QFM News, the Monetary Policy Committee anticipates that the projected slow-down in China, the major consumer of commodities, including copper will impact negatively on the country’s external performance with particularly adverse effects on the exchange rate and consequently inflation.
It also notes that the worsening external environment also presents a challenge to the Central Bank’s ability to accumulate foreign reserves required to mitigate exchange rate volatility.
The Committee however, notes that these external challenges are likely to be mitigated by the downward trend in oil prices and potentially lower Government expenditures on oil imports.
The MPC’s overall assessment is that inflation is on a more favourable trajectory toward the end-year target of 7.0%, than was the case at the November MPC meeting.
It adds that the continued consolidation of the fiscal position by the Government is also expected to contribute to a stable macroeconomic environment going forward.
The next MPC Meeting will take place on 12th May, 2015.