The Bank of Zambia (BOZ) on Wednesday raised the Bank’s Policy Rate by 25 basis points to 9.25 percent for November 2012.
A BOZ statement, released Wednesday after the October meeting of the Monetary Policy Committee, said containing inflation in the short term was critical to achieving lower interest rates in the medium to long term.
“The Committee weighed the risks and was of the opinion that inflationary pressures during the policy-relevant period may pose a threat to the end-year inflation target of 7.0%. To curb inflationary pressures, the Committee therefore, decided to raise the Policy Rate to 9.25% from 9.0%,” the statement said.
The Committee noted upward risks to overall inflation during the month of November which include recent depreciation of the exchange rate, which it said may lead to cost push pressures.
Other risks cited are excess liquidity in the market, which may exert upward pressure on inflation going forward; rising stock feed prices that may contribute to higher meat prices; and the global grain deficit that may induce higher domestic and imported grain prices.