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Zambia inflation nears 2-year high
As markets digest Zambia's latest inflation print, which has increased 13.2 per cent for the month of January, the country still battles persistent inflation and a weakening currency. To unpack this, CNBC Africa is joined by Chilese Moono, Zambia Economist, FNB.
Thu, 25 Jan 2024 16:18:12 GMT
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AI Generated Summary
- The annual inflation rate in Zambia hits a near two-year high of 13.2 per cent in January due to currency depreciation and supply-demand mismatches in the foreign exchange market.
- Collapse in mining production contributes to the quatra's depreciation, with hopes pinned on the debt restructure program to stabilize the currency.
- The Central Bank is expected to tighten its policy measures, including raising the policy rate and statutory reserve ratio, to curb inflation while fostering private sector credit extension for economic growth.
Zambia is facing a challenging economic landscape as inflation skyrockets to a near two-year high of 13.2 per cent in January, and the local currency, the quatrain, depreciates by 34 per cent against the dollar since July. To delve deeper into the implications of these economic indicators, CNBC Africa interviewed Chilese Moono, a Zambia Economist at FNB. Moono highlighted the persistent inflation pressures driven by currency depreciation and the mismatch between foreign exchange supply and demand in the economy. He also discussed the impact of low mining production on forex earnings and the ongoing debt restructure program's potential to stabilize the currency. Furthermore, Moono anticipated the Central Bank's tightening policy stance in response to soaring inflation, with expectations of a further increase in the policy rate and statutory reserve ratio. However, he emphasized the need for structural changes within the economy to address the root causes of the currency challenges. As Zambia navigates these economic hurdles, the government faces the delicate task of balancing inflation containment measures with stimulating private sector credit extension for economic growth.
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