Zambia's central bank held its policy rate steady at 9.75 percent, saying it would continue to maintain a "relatively tight" monetary policy in order to moderate inflationary pressures.
The Bank of Zambia, which raised its rate in June and July by a total of 50 basis points, said it had taken note of the continued presence of inflationary pressures that were largely due to the anticipated public sector wage rises. This is in addition to pressure that may rise from higher food prices due to continued high demand in the region.
Continued weak global growth may lead to lower demand for Zambia's exports though the central bank's policy committee said it had noted the slight increase in the price of copper on the back of an improvement in Chinese imports in recent weeks.
On the other hand, the central bank said inflationary pressures may moderate in the coming month due to the recent stability in the kwacha's exchange rate.
In August, Zambia's inflation rate eased slightly to 7.1 percent from 7.3 percent in the previous two months. In May the inflation rate jumped to 7 percent from 6.5 percent and has remained above 7 percent since then. The central bank targets inflation of 6 percent by the end of the year.
Like many other countries, Zambia's kwacha depreciated in May through early July. Since July 10 the kwacha has bounced back, rising almost 3 percent, trading at 5.38 kwacha to the U.S. dollar today.