Zambia Holds Rate at 2014 Low as Inflation Pressure Persists

(Bloomberg) -- Zambia’s central bank held its key interest rate for a third straight meeting as inflation pressures persist in Africa’s second-biggest copper producer.

The bank maintained the rate at 9.75 percent, Governor Denny Kalyalya told reporters Wednesday in Lusaka, the capital. That’s the lowest since 2014.

Key Insights:

• Inflation accelerated to an almost two-year-high of 8.3 percent in October. The central bank’s projections show that growth in consumer prices will remain outside the upper bound of the target range of 6 percent to 8 percent over the next year.
• Foreign-exchange reserves declined to $1.63 billion at the end of September, enough to cover 1.9 months of imports, from $1.73 billion at end-August; the committee is concerned about the drop.
• The southern African nation had its credit assessment cut deeper into junk last month by Fitch Ratings Ltd., citing a widening budget gap and a faster-than-expected increase in debt levels. The company lowered its long-term foreign currency assessment to B-, with a negative outlook.

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