(Bloomberg) -- Zambia’s central bank left its benchmark interest rate unchanged for a third successive meeting as it sees inflation in single digits over the next two years. 

The monetary policy committee held the rate at 9%, Governor Denny Kalyalya told reporters Wednesday in Lusaka, the capital. 

While annual inflation quickened for the first time in a year to 9.9% in July and may remain elevated in the final quarter of this year and first of next, a rally in the kwacha and a drop in the cost of commodities such as crude and edible oils are likely to ease price pressures.

The MPC expects inflation to come down over the next eight quarters, which is the central bank’s forecast horizon, Kalyalya said. 

The kwacha has gained 1.9% against the dollar this month after bilateral creditors agreed on July 30 to provide the financing assurances Africa’s first pandemic-era sovereign defaulter needs to secure final approval from the International Monetary Fund for a $1.3 billion bailout. 

The MPC expects annual inflation to average 11.4% in 2022, compared with 12.5% projected at its May meeting. Despite the lower average forecast the panel now sees the rate inside the target range of 6% to 8% by the first quarter of 2024 instead of end-2023 previously projected, Kalyalya said.

Rates were also kept unchanged to support economic growth and make a dent in widespread poverty, Kalyalya said.

The central bank lowered its economic growth forecast for 2022 to 3.1%, from 3.5% projected in May, and increased its forecast to 4% for 2023, compared with an earlier estimate of 3.6%.   



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