The decision was reached during the quarterly meeting of the Monetary Policy Committee and Financial Stability Committee held this week.

The meeting determines the lending rate at which commercial banks will borrow money over the next three months.

Also known as the key repo rate, the lending rate is the fee at which the Central Bank lends to commercial banks.

It is used by monetary authorities to control inflation.

In February, the base lending rate had been increased to 7% from 6.5%. The rate was maintained in May 2023 prior to the new development.

According to the Central Bank Governor, John Rwangombwa, the repo rate has been increased in consideration of several uncertainties and aim to maintain a downward trend of inflation.

He further stated that the repo rate has been on rise over the past one and half years, from 4% to the current 7.5% but expressed optimism for decreased rates.

“We expect to see this continued reduction in inflation and return to our band of 2 to 8 percent [in fact around 5 percent] in 2024. If nothing else happens or unexpectedly happens, from our projections, we don’t expect any further increase going forward,” disclosed Rwangombwa.

Central Bank Governor, John Rwangombwa presenting outcomes of the quarterly Monetary Policy and Financial Stability Committee Meeting.