Zambian Central Bank Leaves Key Interest Rate Steady at 9%

Zambia’s central bank left its benchmark interest rate unchanged at 9 percent and forecast that inflation would remain on target, Governor Michael Gondwe said.

Economic optimism and stable market conditions will “have a positive influence on the supply of foreign exchange and consequently have a moderating effect on inflation,” the Lusaka-based Bank of Zambia said in an e-mailed statement today.

Zambia’s inflation accelerated to 6.5 percent in April, from 6.4 percent in March, below the government’s target of 7 percent by year-end. Expectations that supplies of domestically produced corn, fish and vegetables will increase, and that domestic credit will grow at a “minimal” pace, will help contain inflation, according to the statement. Exports, especially merchandise shipments, may rise next month, boosting revenue, it said.

It was the first review of the policy rate since its introduction last month. The central bank will next meet to review the benchmark interest rate at the end of May, it said.

Zambia’s kwacha currency declined for the first time in five days, depreciating 0.1 percent to 5,210 per dollar by 4:21 p.m. in Lusaka, according to data compiled by Bloomberg.

To contact the reporter on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net