LUSAKA, May 22 (Xinhua) -- Zambia's central bank on Wednesday increased its benchmark interest rate by 50 basis points to 10.25 percent from 9.75 percent in a move aimed at controlling inflationary pressures.
In a statement, the bank's monetary policy committee said it decided to raise the policy rate after indications show that inflation was projected to breach the upper bound of the 6-8 percent target range over the forecast horizon due to heightened upside risks.
"Raising the policy rate is therefore, intended to counter inflationary pressures and support macroeconomic stability," Denny Kalyalya, the central bank governor said.
He added that this was essential for sustained and higher economic growth.
While revealing that growth remains positive in the medium to long-term, the central bank chief noted that there was need for urgent implementation of other corrective policy measures that set the fiscal deficits, debt levels and debt service payments on a sustainable path.
Addressing rising domestic arrears will also reduce non-performing loans and strengthen the ability of financial institutions to provide credit to the private sector, he added.
