By ALICE NACHILEMBE
Centre for Trade Policy and Development (CTPD) says as the Bank of Zambia (BoZ) Monetary Policy Committee (MPC) sets to announce its monetary policy decision, the committee should maintain the policy rate at 8.50 percent.
CTPD Head of Research Boyd Muleya said any adjustments to the policy rate should be upwards to arrest demand pressures and moderate inflation in the medium term.
Mr Muleya said inflation is expected to continue above the upper bound of the 6 – 8 percent target range over the forecast horizon.
He said that the center notes that despite the reduction in annual inflation for the month of August 2021, overall inflation rose to a quarterly average of 24.5 percent in the third quarter of 2021 after closing the previous quarter at around 22.9 percent.
Mr Muleya said this is driven mainly by an increase in food inflation as non-food inflation slowed down.
He said Developments in the FOREX market are expected to support the moderation of inflationary pressures in the short-term.
“The decision also recognizes existing susceptibilities in the financial sector and delicate growth, to restore and achieve macroeconomic stability, the implementation of fiscal adjustment measures in line with the Economic Recovery Programme and completing a deal with the IMF for the much-awaited Extended Credit Facility remain critical,” he said.