Zambia News

Zambia Central Bank Hikes Rate to Fight Surging Inflation

Zambia became the second country in the world to increase its benchmark interest rate this year as it seeks to bring down “spiraling” inflation that’s at a five-year high.

The monetary policy committee lifted the rate to 8.5% from 8%, Governor Christopher Mvunga told reporters Wednesday in Lusaka, the capital. That is the first increase since November 2019 and follows tightening by its eastern neighbor, Mozambique, last month.

Zambia Hikes Rates

Just two central banks have increased borrowing costs this year

Source: Bloomberg

The MPC’s decision was a “delicate act of balancing between” the need to fight inflation and to prop up the economy and came after two days of complex deliberations, Mvunga said. The central bank stands ready to tighten policy further with inflation seen moving further from the bank’s 6% to 8% target range over the next two years, he said.

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