ZAMBIA-SINGLE DIGIT INFLATION FOR JUNE 2012

BANK of ZAMBIA
Communiqué
Released at 15 hours on 31st May 2012
The Monetary Policy Committee has maintained the BoZ Policy Rate at
9.0%
The Monetary Policy Committee met today the 31st May 2012 to review recent
economic developments and assess the upside and downside risks to the endyear inflation target of 7.0%.
The Committee observed that  global economic growth  continues to be  weak
underpinned by the continued sovereign debt crisis affecting the Eurozone
economies.  Nonetheless, Zambia’s international trade performance is expected
to remain favourable in June 2012, mainly due to an expected increase in
merchandise export volumes. In addition, the  continued favourable
macroeconomic environment and the seasonal improvement in food supply will
all have a moderating effect on inflation.
In the money market, liquidity conditions are not expected to pose a threat to
inflation in the month of June 2012. Further, the improved supply of maize,
fish and fresh vegetables on account of seasonal factors and the expected
reduction in meat prices following the ban of maize and wheat bran exports will
have a dampening effect on food inflation.
Overall, the above developments are expected to mitigate the lagged passthrough effects of the depreciation of the Kwacha experienced in  recent
months. Given the foregoing, the Committee has weighted the risks to inflation
and has determined that inflation during the policy-relevant period would remain largely consistent with the end year target of 7.0%. Accordingly, the
Committee has decided to maintain the Bank of Zambia Policy Rate at 9.0% in
June 2012.
The next meeting of the Monetary Policy Committee to review the Bank of
Zambia Policy Rate will be held at the end of June 2012
Bank of Zambia
31st May 2012