Zambia's central bank cuts lending rate to 11 percent

Zambia’s central bank cut its benchmark lending rate by 150 basis points to 11 percent on Thursday, citing lower consumer inflation and weak growth.

The Governor, Denmy kalyalya told Reuters in the capital Lusaka that the Bank of Zambia lowered the rate to 11 percent from 12.5 percent. The lowest level since February 2014.

“Inflation has been declining, and we see that it will remain within the medium-term target range of 6-8 percent.We also noted that economic growth had been sluggish,” he said.

The southern African nation’s consumer inflation rate is near the lowest since 2013, with this year’s record harvest of corn, which is used to make a local porridge, leading to lower food prices.

A reduction in fuel costs this month could also ease inflationary pressure in the continent’s second-biggest copper producer.

The global financial body is still engaging with Zambia over a potential program, it said earlier this week. The nation was on course to reach a staff-level deal with the IMF for about $1.3 billion last month, Finance Minister Felix Mutati said at the time.

The inflation rate fell to 6.6 percent in July and has been below the government’s 9 percent target for the year since November. It peaked at 22.9 percent in February last year.