The bank of Zambia has observed that 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 ban exports will have a dampening effect on food inflation.
Recently government banned the exportation of maize and wheat and the annual food inflation rate has been recorded at 6.8percent this month which is an increase from 6.4percent recorded in April 2012.
Meanwhile the central bank has maintained its monetary policy rate at 9percent due to the global economic growth which continues to be weak underpinned by the continued sovereign debt crisis affecting the euro zone economies.
According to bank of Zambia deputy governor Dr Bwalya Ngandu the committee met today to review recent economic developments and assess the upside and downside risks to end the year inflation target of 7percent.
Dr Ngandu nonetheless says 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 central bank deputy governor says the continued favourable macroeconomic environment and the seasonal improvements in food supply will have a moderating effect on inflation.
Meanwhile in the money market, Dr Ngandu says liquidity conditions are not expected to pose a threat to inflation in June.
He says overall the above developments are expected to mitigate the lagged pass-through effects of the depreciation of the kwacha experienced in recent month.
Meanwhile Dr Ngandu has disclosed that the Zambia public procurement authority which was tasked to find and shortlist firms to print out the new kwacha note has completed the technical evaluation.
He says the company to print the new notes will be selected from the 6applicants who applied to print paper notes and from the 4 applicants for coins.and dr Ngandu says the bank is still reviewing laws regarding the Islamic banking so that it is in conformity with the environment.