The central bank in Zambia has increased its benchmark at which commercial banks peg their lending interest rates in an effort to curb increasing inflation amid the depreciation of the local currency, the Times of Zambia reported on Monday.
The Bank of Zambia (BoZ) recently increased the policy rate from 9.27 percent to 10.25 percent as part of measures to tighten monetary policy which was also affecting the country's inflation.
Kanguya Mayondi, the head of the central bank's public relations division, said the bank's Monetary Policy Committee, decided to increase the interest rate benchmark again from 10.25 percent to 12 percent.
The committee observed that inflationary pressures have continued to persist in 2014, with inflation rising from 7.3 percent in January to 7.7 percent in March, he said.
"It is expected that the pass-through effects from the depreciation of the exchange rate will impact on inflation," he was quoted as saying by the paper.
However, the committee's overall assessment is that risks to inflation are generally on the upside and that is why it resolved to further tighten monetary policy, he added.
He further said increase in the supply of selected food items during the forthcoming harvest of agricultural products would moderate inflationary pressures.