Lusaka — Zambia’s central bank raised its benchmark lending rate by 50 basis points to 10.25% to counter inflationary pressure and support macroeconomic stability, its governor Denny Kalyalya said on Wednesday.
Annual inflation is expected to remain above the bank’s 6-8 percent target over the next eight quarters, Kalyalya told journalists.
“Lower maize output, continued elevated fiscal deficits, high debt service payments and a decline in international reserves are among the upside risks to inflation,” he said.
Those risks were also contributing to the negative sentiment which was pressuring the kwacha, he added.
When asked about the situation at Vedanta-controlled Konkola Copper Mines (KCM), which is facing liquidation, Kalyalya said developments in the mining sector had a bearing on the economy.
He added that he hoped a disagreement with mining companies over a hike in tax bills could be resolved amicably so that the focus can return to production.
Zambia has started to look for a new investor for KCM, President Edgar Lungu said on Monday, in a move likely to stoke international miners’ concerns about rising government intervention in the sector.