The Bank of Zambia has maintained at 8 percent the monetary policy rate.
Addressing the media in Lusaka today, Central Bank Governor. Mr. Christopher Mvunga explained that the decision was arrived at following wide consultation with key stakeholders.
Mr. Mvunga said three options such as reducing, maintaing and rising the monetary policy rate were considered by the monetary policy committee.
He says reducing the rate in an attempt to give further support to the economy would have put additional pressure on the exchange rate in a supply constrained environment.
Mr. Mvunga explains that reducing the monetary policy rate would have worsened the inflation outlook.
Mr. Mvunga further explains that rising the policy rate in an effort to control inflation in a depressed economy would further result in the contraction of economic activities and threaten the stability of the financial sector.
He says it is against that background that the monetary policy committe decided against rising or redcing the monetary policy rate in order to support the local economy.
Mr. Mvunga said in future, decisions on the monetary policy rate will be guided on inflation forecasts, outcomes, identified risks including those associated with financial stability and the coronavirus pandemic.
Meanwhile, Mr. Mvunga has assured the financial sector that the central bank will continue to provide support in the market to mitigate the depreciation of the kwacha against other foreign convertible currencies the until the situation improves.
And Mr. Mvunga has said the Bank of Zambia is not in the business of printing money for election purposes.
He also denied claims that he will use his political connections with the ruling Patriotic Front to interfere and influence operations of the Bank of Zambia.