By Chris Mfula
LUSAKA (Reuters) -Zambia’s central bank kept its monetary policy rate unchanged at 9.0% on Wednesday, noting a decline in inflation and progress on debt restructuring.
Central bank governor Denny 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 versus 9.9% in September.
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 debt relief terms with official creditors by the end of the year and with commercial creditors in early 2023.
“The decision is not entirely surprising, given the better-than-expected inflation outcomes to date and Zambia’s still sub-trend economic growth,” Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said.
The monetary policy committee said in a statement it had taken into account sluggish growth and other vulnerabilities of the financial sector.
Real gross domestic product is seen growing 3% in 2022, down from a 3.1% projection in August.
Zambia’s economy would grow then 4% in 2023 and 4.1% in 2024.
(Reporting by Chris Mfula; Writing by Anait Miridzhanian; Editing by James Macharia Chege, Alex Richardson and Barbara Lewis)
