Zambia Leaves Policy Rate Unchanged, Lowers 2022 Forecast | The mighty 790 KFGO

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By Chris Mfula

LUSAKA (Reuters) – Zambia’s central bank kept its key rate unchanged at 9.0% on Wednesday and lowered its forecasts for inflation and economic growth for this year.

The bank cited rising inflation risks, continued financial sector vulnerabilities and weak domestic economic growth among the reasons for its decision.

The Bank of Zambia has maintained its main policy rate at 9.0% since November 2021.

Annual inflation peaked at 24.6% in the middle of last year and fell sharply until June, when it reached 9.7%, before rising to 9.9% in July.

Central bank governor Denny Kalyalya told a press conference that inflation should fall back to the bank’s target range of 6% to 8% in the first quarter of 2024.

The bank now expects inflation to average 11.4% this year, down from 12.5% ​​in May. Real gross domestic product is expected to grow 3.1% in 2022, compared to a projection of 3.5% in May.

In 2020, Zambia became the first African country to default on its sovereign debt during the COVID-19 pandemic.

He hopes the International Monetary Fund’s board will approve a $1.4 billion loan program as early as the end of this month, after its official creditors pledge to negotiate debt restructuring.

(Reporting by Chris Mfula; Writing by Alexander Winning; Editing by Kim Coghill)

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