Zambia raises interest rates to 15.5%

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Zambia’s central bank has pushed up interest rates from 12.5% to 15.5% in an effort to curb soaring inflation.

Consumer prices nearly doubled in October to 14.3% from 7.7% in September as Zambia’s currency weakened sharply.Zambia interest

Zambia’s kwacha has halved in value against the dollar this year as lower copper prices have hit Africa’s second-biggest producer of the metal.

In October the country held a national day of prayer to try to counteract its economic crisis.

The increase in Zambia’s benchmark lending rate was the first by the southern African nation since November 2014.

“In arriving at our decision the committee took into account the inflationary outturn. Keeping inflation expectations anchored in single digits is critical,” central bank governor Denny Kalyalya said.

The kwacha rose around 0.6% against the dollar following the announcement.

Globally, copper prices hit a six-year low in August. Growth in demand for the metal has slowed as China looks to reposition its economy towards consumer-led growth and away from exports and investment.

Zambia’s kwacha has been hit in the past year, falling more than 50% against the dollar, and around the same against the pound.

Food prices have soared in the country, and power shortages have also been triggered by low water-levels in Lake Kariba, where hydropower plants supply much of the country’s electricity.