Zambia Raises Interest Rates for First Time in 7 MonthsMatthew Hill
Zambia’s central bank increased its benchmark interest rate for the first time in seven months to curb accelerating inflation.
The policy rate was raised by 25 basis points to 9.5 percent, the Lusaka-based Bank of Zambia said in an e-mailed statement today.
“The committee anticipates upward risks to inflation during the month of June 2013, mainly arising from the recent increase in the pump price of fuel, coupled with the lagged effects of the recent exchange-rate depreciation,” the bank said in an e-mailed statement.
Consumer prices in Africa’s biggest copper producer accelerated for the first time this year to 7 percent in May from a year earlier compared with 6.5 percent the previous month, the country’s Central Statistics Office said yesterday. The government removed fuel subsidies on May 1, increasing the cost of gasoline and diesel by more than a fifth.
Zambia’s kwacha fell 0.4 percent to 5.35 per dollar by 12:20 p.m. in Lusaka, extending the decline this year to 3 percent.
The central bank “weighed the risks and was of the opinion that inflationary pressures during the policy-relevant period would be a threat to the achievement of end-year inflation target of 6 percent,” it said.