Bank of Zambia maintains policy rate at 9.75 percent

The Bank of Zambia (BOZ) Governor Deny Kalyalya has disclosed that it has decided to keep the policy rate unchanged at 9.75 percent.

ZANIS reports that Dr. Kalyalya said this in Lusaka today during the Monetary Policy press briefing held in Lusaka today.

Dr. Kalyalya said despite edging up further in the second quarter, inflation remained within the target range of 6-8 percent.

He explained that the annual inflation at 7.4 percent in June 2018 was higher than the 7.1 percent recorded in March 2-18, on account of the reduction in supply of selected food items, general increase in transportation costs, and the depreciation of the Kwacha against the United States dollar.

Dr. Kalyalya said the inflation is projected to remain above 7.5 percent in the second half of 2018 and to be anchored around 7 percent the midpoint of the 6-8 percent target range.

He said in line with the monetary policy stance, the overnight interbank rate was contained within the Policy Rate corridor.

Dr. Kalyalya further said the rate averaged 9.67 percent in the second quarter, just below the Policy rate 9.75 percent, saying this was achieved through the conduct of appropriate open market operations.

Meanwhile Dr. Kalyalya said there was a reduction in demand for government securities in the second quarter, mainly due to low liquidity levels in the money market and adverse sentiments relating to the protracted fiscal challenges.

Dr. Kalyalya stressed that the subscription rates for treasury bills and government bond fell to 43.3 percent and 94.9 from 92.5 and 154.5 percent in the first quarter, respectively.

He said despite the fall in demand for government securities ,the stock of outstanding government securities, at K51.8 billion at the end of June 2018 was 2.0 percent higher than the K50.9 billion recorded at the end of March 2018.