BOZ Holds Interest Rates at 9%

The Bank of Zambia has said it will hold the country’s basic rate of interest at 9.0% for the third time in a row, citing the slowdown in domestic inflation as well as global financial headwinds as reasons to keep rates steady.

GoZ Governor Denny Kanlyalya said the bank’s monetary policy committee had based its decision largely on prevailing macroeconomic conditions, seeing the interest rate as key to maintaining accommodative credit flows to businesses and investors.

“It is quite significant to see that this is coming out so strongly as a necessary tool to be used in reviving the speed observed in the domestic economy, Kalyalya said.

The bank’s governor said the policy rate was intended to support Zambia’s ongoing economic recovery, which is now hinging on the growth of private investment. 

This announcement marks the third time the bank has been able to hold interest rates, largely as the result of reduced inflation brought about by the New Dawn government’s programme of economic reform. The steady rate means that families and businesses can more easily plan for the future, while the relatively low interest allows companies to borrow money more affordably to invest in their businesses.  

However, Dr Kalyalya said the bank was concerned by global developments that could knock Zambia’s economic recovery off course. In particular he said he agreed with the International Monetary Fund’s assessment that the lingering effects of the pandemic and the war in Ukraine could have negative consequences for Zambia’s growth.