The central bank in Africa’s second largest red metal hotspot Zambia kept its policy rate unchanged at 9% in its last rate decision session of the year. This was announced by the Bank of Zambia Governor Dr. Denny Kalyalya at a press briefing in Lusaka the capital on 23 November. The monetary policy committee commenced two day deliberations on Monday 21 November at which it was established that despite inflation falling outside the 6-8% target bracket, the central bank still sees attainment of the targeted objective by 1Q23. Zambia is one of the 11 African nations that have their rate decision meetings between November and December of which 7 are expected to hike their benchmark interest rates.
Dr. Kalyalya did acknowledge that the path that inflation has taken post the August meeting is slightly elevated but remains confident that it will be successfully tamed with the BOZ target band in the next 5 quarters. The monetary policy communique further acknowledge the slight deterioration in the manufacturing gauge the purchasing managers index to 49.0 on the back of liquidity conditions, confidence nonetheless remained high in October. This was the first time in 4 months the PMI slid below 50 in contraction territory posing concern.
The decline in copper prices weighed by the growth weakness in China did impact the revenue earning capacity of the fiscal purse while uncertainty brewing from delayed debt restructure remains a hurdle for the market. The International Monetary Fund approved a $1.3 billion bailout facility as precursor for debt restructure yet to be concluded as the MinFin navigates complexities with private and bilateral creditors.
Domestic credit grew 9.5% in September a few points higher than 6.8% in June supported by recovery in lending and risk appetite clawing back into the Zambia market.
Exogenous factors weighing the global landscape include the global grain dislocation keeping food prices elevated and the asset sell off pressure in light of investors seeking safe haven in dollar denominated assets which potentially is putting the kwacha under pressure.
Other key announcements into the end of the week are inflation release for November while next week the energy regulation board will announce the new pump price for fuel which analysts expect to adjust slightly upwards.
Kwacha Arbitrageur
