BoZ cuts interest rates

Dr. Denny Kalyalya BoZ Governor

The Bank of Zambia has reduced the benchmark lending rate by 150 basis points to 11 percent from 12.5 percent.

The Central Bank has also reduced the Statutory Reserve Ratio by 300 basis points to 9.5 percent from 12.5 percent.

Bank of Zambia Governor Dr. Denny Kalyalya has told a media briefing that in arriving at this decision, the Monetary Policy Committee noted that annual overall inflation ended the second quarter at 6.8 percent up from 6.7 percent at the end of first quarter well within the medium term target range of 6 to 8 percent.

He adds that the inflation forecasts indicate that it will remain at current levels for the remainder of the year and trend towards the lower bound of the target range over the medium term.

And the Dr Kalyalya says following the reduction of the Policy Rate and Statutory Reserve ration in May 2017, the overnight interbank rate declined to 12.2 percent at end of June 2017 from 13 percent at end of March 2017 as liquidity conditions eased.

He says other factors that contributed to the easing in liquidity conditions included net government spending and Bank of Zambia purchases of foreign exchange to build up international reserves.

Dr. Kalyalya has explained that to maintain the interbank rate within the policy rate corridor of 11.5 to 13.5 percent, the central bank conducted appropriate open market operations.