Zambia’s central bank left its benchmark interest rate unchanged for a second consecutive month, forecasting that inflation in Africa’s largest copper producer will remain below its target.
The policy rate was left at 9 percent, the central bank said in a statement released in Lusaka, the capital, today. The bank introduced the rate in March to help anchor inflation expectations in the economy.
Inflation accelerated to 6.6 percent in May from 6.5 percent in the previous month, lower than the central bank’s year-end target of 7 percent.
“The improved supply of maize, fish and fresh vegetables on account of seasonal factors and the expected reduction in meat prices following the ban of maize and wheat bran exports will have a dampening effect on food inflation,” Deputy Governor Bwalya Ng’andu told reporters in Lusaka.
Lower food prices will probably mitigate the effects of a depreciating kwacha, Ng’andu said. Zambia’s currency has dropped 3.6 percent against the dollar this year, trading as low as 5,374 today, according to data compiled by Bloomberg.
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