Bank Of Zambia Increases Lending Interest Rate To 15.5% To Reduce Inflation And Stabilize Kwacha

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The Bank of Zambia (BOZ) Monetary Committee has recently announced an increase over Zambia’s official lending interest rate from 12.5% to 15.5% in an intend to stabilize the Zambian Kwacha (ZMW) and inflation in the country.

The measure comes after consumer prices rose by 14.3% on a year to year (y/y) basis in October, 2015 compared to an increase of 7.7% y/y in September, 2015 and far above market expectations of 8.1% y/y for the prior month.

The higher Zambia’s official lending rate seeks to make the ZMW more expensive for the public and reduce its liquidity in the market.

This intervention is expected to bring Zambia’s overall inflation again to a single digit number then bringing back prices down, explained BOZ Governor Denny Kalyalya.