Figures from the Monetary Policy Committee statement last Friday show that annual inflation for 2020 has been projected at 9.8%, which is 0.4 percentage points higher than the 9.4% obtained in 2019.
The above has been attributed to an impending significant inflationary pressure emanating from a gradual pick-up in food prices especially maize. Meanwhile, headline inflation declined to an average of 8.9% in the second quarter of 2020
from an average of 10.6% in the first quarter, on the back of weakening food and domestic pump fuel prices.
The MPC decided to maintain the Policy Rate at 13.5% and the Lombard Rate at 0.2 percentage points above the Policy Rate. “Although inflation developments were favourable in the first
half of the year, risks going forward remain elevated. This coupled with domestic and external sector imbalances will weigh negatively in the short to medium term.” says part of the statement.