By VITA BANDA
ECONOMIST Kelvin Chisanga has projected a hike in the monetary policy rate by 50 or 100 basis points by the Bank of Zambia Monetary Policy Committee.
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Mr Chisanga said Inflation has been showing strong upward movements taking it far away from the desired policy of single digit, as this is driving unhealthy cost pressure in prices.
“As the Bank of Zambia Monetary Policy Committee sits this week from today (Monday) up to tomorrow (today), we are likely to see a hike in the monetary policy rate to be announced on Wednesday which will be contrarily to some of our views owing to the fact that the credit pipeline, local economy and fiscal energies will totally be disturbed.”
The global economy has seen with many challenging situations and will continue to see rugged growth, due to unstable geopolitics such as the Russian-Ukraine war which now included the recent Israel-Palestine war. These factors among other elements will underplay the potentials in the global economy. “The Zambian economy is likely to close the year 2023 on a lower output than the earlier expected growth margins, due to changes in output performances in its wide sectors. Inflation in Zambia has been showing strong upward movements taking it far away from the desired policy corridor of single digit, as this is driving unhealthy cost pressure in prices. However, a serious shift in the conditions in the Middle East could push oil prices higher, a strong case to undoing the trend for good and this can put a lot of things in disarray, “he said.
He added that the Kwacha’s instability would equally play a role in the upward adjustment of the MPR.
The troubles for the Zambian Kwacha are not yet over, Zambia’s apex bank has been trying to cool this pressure experiencing in the domestic currency. So, the bank of Zambia had to lose the breaks on statutory reserve ratio twice this year in February and November by trying to cool down this overheating effect with the local market conditions though the proper remedy is directly to do with export games.
thus, the raise of rates remains to be a real possibility in their views, and along with it, this week’s focus on monetary policy rate looks like it, it will follow suit with a raise by either going for a 50 or 100 basis point, as justification still sit that the local market currency will continue to rally behind of the dollar against other currencies,” he said.
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