Zambia’s central bank raised its key interest rate for a second time this year, bucking a global easing trend, in a bid to support its currency and tame inflation.
The Bank of Zambia increased the rate to 11.5% from 10.25%, Governor Denny Kalyalya told reporters in Lusaka, the capital. That’s the highest level since May 2017.
The central bank faces a trade-off between stabilising the kwacha to help control inflation and boosting an economy that expanded at the slowest since least the first quarter of 2016 in the three months through June.
Inflation accelerated to 10.7% in October, the highest level in three years, as the worst drought in almost four decades in the southwest of the country caused crop failure. Kalyalya said while the MPC was mindful of the slowdown in economic growth, the upside risks to inflation have increased and there is a need to restore macro-economic stability.