160 Zambia’s central bank is preparing to raise interest rates for the fifth consecutive time to tackle inflation and stabilize its currency. Analysts surveyed by Bloomberg, including experts from Rand Merchant Bank and Oxford Economics Africa, predict that the monetary policy committee will hike the benchmark rate by 100 basis points to 12%. This adjustment would maintain the rate at its previous level set in November, marking the highest rate in seven years. The rate increase is part of Zambia’s broader efforts to tighten liquidity conditions in response to the weakening kwacha and inflationary pressures. Recent measures include new regulations introduced on January 1, mandating exporters to hold accounts in Zambia to receive payment for exports. Additionally, the Finance Ministry directed commercial banks to transfer government deposits to the Treasury account at the central bank, potentially withdrawing about 12 billion kwacha from the market. Effective February 5, the Bank of Zambia raised the reserve ratio requirement for lenders from 17% to 26%. Samantha Singh-Jami, Africa strategist at RMB, anticipates that the central bank will further raise the policy rate to complement the recent increase in the statutory reserve ratio. This move aims to mitigate current inflationary pressures and align with the Bank of Zambia’s target band of 6%-8%. The depreciation of the kwacha against the dollar, amounting to a 13% loss since the MPC’s November rate decision, is attributed to various factors. These include declining copper output, reduced metal prices, and challenges in debt restructuring talks. Annual headline and non-food inflation rates have surged to their highest levels since 2022, underscoring the urgency of monetary policy adjustments. You Might Be Interested In Nigeria Faces Escalating Currency Crisis and Food Insecurity FIS Enhances Card Fraud Detection with AI Collaboration Philippines May Align Monetary Policy with Fed’s Rate Cut, Says Finance Chief IMF Recognizes Sri Lanka as First in Asia to Publicize GDF IMF Urges Acceleration of Currency Reforms in Zimbabwe Strengthening Ghana’s Agriculture: U.S. and EU Collaborate to Boost Financing Opportunities