On 22nd February 2017 the Bank of Zambia (BoZ) reduced the Policy Rate from 15.5% to 14%, the Statutory Reserve Ration from 18% to 15.5% and the Overnight Lending Facility Rate from 1,000 basis points to 600 above the Policy Rate.
The bank justified the move with a significant reduction in annual inflation rate.
Governor Denny Kalyalya explained that the reduction was necessary to fight low and sluggish economic growth and the high interest rates that are constraining access to credit by the productive sectors of the economy.
“Changes in the policy rate will be guided by inflation outcomes and forecasts as well as progress in fiscal consolidation,” Governor Kalyalya concluded.
Year-on-year inflation for January 2017 slowed to 7%, from 7.5% recorded in December 2016.