Fitch Solutions anticipates that Bank of Zambia to increase the monetary policy rate by 50 basis points, according to an email sent to subscribers of their premium service on 16th August 2019.
In country, with Zambia’s inflation outside the target range of 6 to 8%, analysts are forecasting an increase in the policy rate when the Central Bank Governor Denny Kalyala announces the Monetary Policy Rate following the meeting scheduled for 19th to 20th August 2019. The Consumer Price Index in Zambia increased 0.50 percent in July of 2019 over the previous month, according to the Central Statistics Office.
“We at Fitch Solutions expect that the Bank of Zambia (BoZ) will implement further monetary tightening over the coming quarters in an effort to contain inflationary and exchange rate pressures. We forecast that the BoZ will hike its policy rate by 50 basis points (bps) to 10.75% by end-2019, before raising it again to 11.25% in 2020″, read the email from Fitch Solutions sent to subscribers.
Globally, with depressing news of one proxy of growth expectations, the US 10-year real yield (adjusted for inflation) showing how it has returned to negative territory for the first time since the last big global growth scare peaked during the summer of 2016, according to the Financial Times, Governor Kalyalya and his team will no doubt mention this as one of the external forces that will speak to the decision that the MPC will take.
With Gold showing signs of resurgence, the argument of using the metal as a means of securing reserves does become tempting as international investors rush to it as a safe haven. These are no doubt uncertain times.
Anonymous Opinion on the Impact of Uncertainty
Financial markets are often accused of complacency. However, the mood just now is not complacency but anxiety and it is deepening by the day. In Germany interest rates are negative all the way from overnight deposits to 30-year bonds. In Switzerland negative yields extend right up to 50-year bonds. In America, meanwhile, interest rates on ten-year bonds are lower than on three-month bills—a harbinger of recession. Angst is evident elsewhere, too. The safe-haven dollar is up against many other currencies. Gold is at a six-year high. Copper prices, a proxy for industrial health, are down sharply. Despite Iran’s seizure of oil tankers in the Gulf, oil prices have sunk to below $60 a barrel. Plenty of people fear that these strange signals portend a global recession. Yet a recession is so far a fear, not a reality. The true problem is that firms and markets are struggling to get to grips with uncertainty. And that is the result of the trade war between America and China.