The Bank of Zambia (BOZ) has increased the monetary policy rate from 8 percent to 8.5 percent in order to strike a balance between economic growth and rising inflation.
BOZ Governor Christopher Mvunga said the rise in the policy rate by 50 basis points has been necessitated by the rising inflationary pressures.
Mr Mvunga explained that the rise in the monetary policy rate from 8 percent to 8.5 percent means that the cost of borrowing from lending institutions will gradually go up.
He made the remarks today during the monetary policy committee announcement and press briefing, held at the BOZ Headquarters in Lusaka.
“The Monetary Policy Committee took into account rising Inflationary pressures, with inflation projected to deviate further away from the target over the next eight quarters. This decision was taken while being mindful of the weak economic environment and fragilities in the financial sector,” he stressed.
The Bank of Zambia Governor was however, quick to say that the Central Bank has taken numerous steps to restore the macro-economic stability in the country.
He cited the maintaining of the policy rate at 8 percent last November, despite the imbalances in the economy as one of the approaches carried out.
Mr Mvunga underscored that the rising policy rate will not have any impact on already existing loans.
Meanwhile, the BOZ Governor pointed out that K4.1 billion has been disbursed to successful applicants from the K10 billion Stimulus package eye marked which was made available for disbursement to would be beneficiaries.
The main aim of the K10 billion stimulus package facility is to strengthen and enhance financial sector resilience, particularly in the wake of the outbreak of COVID-19 and its potentially devastating impact on the domestic economy.