Chisanga backs Bank of Zambia’s steady policy rate as key to inflation stability

An economist, Kelvin Chisanga, says the Bank of Zambia’s (BoZ) decision to maintain the Monetary Policy Rate (MPR) at 14.5 percent for the second consecutive time will help stabilize inflation in line with prevailing economic conditions.

Chisanga noted that the Monetary Policy Committee’s (MPC) stance reflected a balance between supporting credit flows to businesses and shielding the economy from both domestic and external risks.

“The unchanged rate continues to provide an accommodative stance for private sector investment and business activity, which are gradually picking up as the economy recovers,” he said in a statement on Monday.

He added that the 14.5 percent MPR had done “heavy lifting” in anchoring inflation within the target band, supporting short-term growth, and cushioning the economy against shocks such as oil price volatility, lingering COVID-19 impacts, and global uncertainty tied to the Russia-Ukraine conflict and other geopolitical tensions.

Chisanga further explained that the MPR underpins aggregate demand by creating a balanced scale that sustains the current recovery momentum.

Highlighting its practical importance, he said the policy rate served as a benchmark for lending costs in both financial and non-financial institutions, directly influencing loans and credit facilities available to households and businesses.

“By holding at 14.5 percent, BoZ ensures relatively stable borrowing costs, which strengthens business activity, investment flows, and overall economic productivity,” he said.

WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.