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Bank of Zambia cuts policy rate

The Bank of Zambia trimmed its policy rate and statutory reserve ratio, saying inflation is expected to remain within its target range of 6% to 8% over the next eight quarters.

The central bank lowered its key policy rate by 50 basis points to 9.75% and statutory reserve ratio by 300 basis points to 5.0%. The bank commenced its monetary easing cycle in February 2017 as current and projected inflation rate trended downward since March 2016.

Overall annual inflation stood at 6.1% at the end of fourth quarter of 2017, down from 6.6% in the previous quarter and within the lower bound of the target range, according to the bank.

Annual inflation grew slightly to 6.2% in January, it added, driven mainly by increases in housing, furnishing and household equipment inflation.

The bank said its decision was also made in consideration of subdued economic growth, high lending rates that continue to constrain access to credit by the productive sectors of the economy, and the risks to the stability of the financial sector.