Zambia Central Bank Holds Lending Rate at 9%

Zambia’s central bank on Wednesday (November 23, 2022) maintains its key monetary policy, the benchmark lending rate at 9%, for the fourth time in a row this year, citing slowing inflationary pressure in Africa’s second-largest copper and cobalt producer.

Central Bank Governor Denny Kalyalya said Zambia’s recovering currency, propelled by improved food production, and has helped slow down inflation, which fell to 9.7% in October from 9.9% a month earlier.

Kalyalya told a news conference that inflation was expected to maintain a downward trend and return to the range of 6%-8% in the first quarter of 2024. The bank sees inflation averaging 11.3% and 8.5% in 2022 and 2023 respectively.

Annual inflation was 9.7% in October, moderated from 9.9% recorded by the statistics office in September 2022. The Bank of Zambia has kept its main lending rate at 9.0% since November 2021.

Kalyalya said that the monetary policy committee (MPC) expected negotiations on debt restructuring to conclude over the first half of 2023 with a significant positive impact on the budget.

The southern African country, the first on the continent to default during the COVID-19 era, said in October it hoped to agree on debt relief terms with official creditors by the end of the year and with commercial creditors in early 2023.

Pressures from its debt load have affected its economic performance followed by swarms of rating downgrades by global rating agencies, thus making borrowing from the Eurobond market close to impossible.