Maravi

BoZ maintains 7% inflation target

BoZ maintains 7% inflation target
By Kabanda Chulu
Wednesday September 03, 2008 [04:01]

THE Bank of Zambia (BoZ) has said the seven per cent year-end inflation target still stands despite the variables threatening its attainment. And the kwacha has continued its steady recovery due to the increase in demand for the local currency from exporters. Commenting on the rise in the inflation target for August, which stands at 13.2 per cent, BoZ deputy governor for operations Dr Denny Kalyalya on Monday said the government has not revised the year-end inflation target.

“The inflation target still remains the same because government has not revised this target and our focus is on attaining the same target until such a time when the government says otherwise,” he said.

However, variables such as increasing global crude oil and food prices seem to threaten the attainment of the single digit rate of inflation.

Towards the end of 2007 and due to various strong economic variables that resulted in higher inflationary pressures, the government revised the inflation target from five per cent to about 10 per cent.

And recently, during the second quarterly media briefing, BoZ Governor Dr Caleb Fundanga said inflationary pressures would arise from several factors that included the increasing global oil prices, the government’s removal of subsidy on domestic fuel prices and the 15 per cent wage increase for government workers.

“However, we are optimistic to attain the year-end single digit inflation target of seven per cent because the inflationary pressures would be mitigated by the effects of the kwacha appreciation against major foreign currencies and also food inflation will reduce with the commencement of the crop marketing season.”

And according to the Finance Bank Treasury Market report, the kwacha has continued its steady recovery from the losses experienced in the week beginning August 19, 2008.
It stated that exporters have shown greater demand for the local currency in the wake of month-end associated obligations.

The report stated that larger foreign exchange inflows were seen coming from the mines as they positioned themselves to meet month-end kwacha settlements.
As at yesterday, the kwacha was trading at K3,517.04 against the US Dollar and at K6,334.89 against the British Pound sterling and at K5,139.09 against the Euro.

Labels: BOZ, INFLATION

posted by MrK @ 5:38 PM