BOZ MAINTAIN THE POLICY RATE AT 8.9%
The Policy Rate has been maintained at 8.0% to moderate risks to financial stability and support growth, lives and livelihoods.
The decision was arrived at by the Monetary Policy Committee at its quarterly meeting held on November 16 – 17, 2020.
This decision also allows monetary policy measures taken earlier in the year to take full effect. This is despite inflation being projected to persist above the 6-8% target range throughout the forecast horizon (Q4 2020 – Q3 2022).
The Committee noted that financial stability remains fragile despite signs of marginal improvement in economic activity in the third quarter following the partial relaxation of Covid-19 restrictions.
Highlights: Less severe contraction of the global economy projected in 2020; Domestic economic activity showing signs of picking up, but weaker recovery projected in the medium-term; Inflationary pressures remain high; Overnight interbank rate declines further as monetary policy remains accommodative;
Demand for Government securities remains high; Interest rates decline further; Credit to the private sector remains subdued, but money supply expands further; Fiscal pressures persist; Current account surplus expands; Rate of depreciation of the Kwacha slows down.
Decisions on the Policy Rate will be guided by inflation forecasts, outcomes, and identified risks, including those associated with financial stability and the Covid-19 pandemic.
The next Monetary Policy Committee Meeting is scheduled for February 15 – 16, 2021.