BoZ Keeps key interest rate on hold at 9% as Inflation slows


The Bank of Zambia has kept its benchmark interest rate unchanged on expectations that inflation will continue slowing and to support a fragile economic recovery.

Governor Denny Kalyalya told a media briefing on Wednesday that the monetary policy committee held the rate at 9%.

This was Dr Kalyalya’s second rate decision since being reappointed to the post in September.

Dr Kalyalya said the decision to hold was supported by a “sharp decline in inflation since December” and due to “some fragility” in economic growth.

Key factors the Committee took into account include the sharp deceleration in inflation and its projected continued trending towards the 6-8% target range over the forecast period from Q1 2022 to Q4 2023.

“However, upside risks to the inflation outlook remain. These include increase in crude oil prices, possible short term effects of the transition to cost-reflective electricity tariffs, lower crop production due to adverse weather conditions, lingering supply chain bottlenecks induced by the Covid-19 pandemic, and tightening of monetary policies in major economies in response to rising inflation,” Dr Kalyalya stressed.

The MPC forecasts the economy will grow 3.5% in 2022 and 3.6% the following year.

Zambia’s inflation rate dropped to 15.1% in January, the lowest in almost two years, compared with 19.3% in November.

Dr Kalyalya said the central bank projects inflation will continue to trend toward its 6% to 8% target range over the next eight quarters.

This is “mainly due to the catalytic benefits of securing an International Monetary Fund program such as access to budget support, a reduction of external debt burden through restructuring and unlocking investment,” he said.

The central bank forecasts inflation will average 13.2% in 2022, compared with the 15% projected at its MPC meeting in November, when it hiked the key rate by 50 basis points.

Dr Kalyalya said the policy committee also sees inflation averaging 7.3% in 2023, compared with its 9.3% November forecast.

The Governor warned that adverse weather conditions, supply chain bottlenecks, an 8% depreciation in the kwacha against the dollar this year, surging energy prices and an anticipated increase in power tariffs in March are upside risks to the inflation outlook.

Dr Kalyalya said decisions on the Policy Rate will continue to be guided by inflation forecasts, outcomes, and identified risks, including those associated with financial stability and the Covid-19 pandemic.

The Committee also noted and welcomed the Medium-Term Budget Plan (White Paper) saying execution of this Plan is deemed critical to the achievement of macroeconomic stability, including low inflation and a stable financial system.

The next Monetary Policy Committee Meeting is scheduled for May 16 and 17, 2022.


  1. The method that BoZ uses to calculate the inflation is FLAWED, that’s why they get to 15%. If you use the internationally accepted method you get to 20.4%. Which is unacceptably high. Time to reshuffle some ministers, six months in power is enough to get the right policies in place, now NOTHING has happened.

  2. Zambia’s interest rates are commoditized by the so-called commercial banks and other lenders.Why is it that Zambia has a whopping DOUBLE-DIGIT difference? Is it unreasonable to expect that 9% is prime and lending is somewhere at the most 10%? Why should it be upwards of 20%???? Vinangu ivi tizicitako ma kindly-kindly bane.

  3. This hard to understand.
    I miss Mvunga, his reports were easy to understand, everything was about BoZ selling Gold. Not this man.

  4. This Kalyalya is a failure. He might have all academic credentials but he is a counterfeit like his master. The choice, his master was bragging about on BBC, is the worst ever. Let him go to UNZA and be a lecturer. He is a worst of space. Mvunga, even though is a drunkard, is far much better than this man.Him and Musokotwane are square pegs in a round hole for their jobs.

  5. Dr. Kalyalya and Bally’s way of arresting inflation is to maintain high bank interest rates. Their formula is that of ensuring Zambians are not able to borrow and invest. It is a way of ensuring Zambians do not have enough money to spend in the hope that prices of commodities will drop and they can tell us inflation has come down. My problem is that if Zambians cannot borrow and invest, how will the supply side of our economy and growth be stimulated? And if the supply side of our economy and growth are not stimulated, what will stop Zambia from continuing to be hugely import-dependent? I fail to see how the Zambian economy will improve with the measures currently being put in place. These guys at the helm are not telling us anything new that will change things in Zambia.

  6. When is BoZ introducing an e-Kwacha? We need cheap money. These banks are squeezing us. Mobile money is becoming unaffordable and exploitative. Mr Governor, we need new innovative ideas that will establish Zambia in the 21st century.

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