- Bank of Zambia cuts benchmark rate by 150bps to 11%;
- Statutory Reserve Ratio slashed 300bps to 9.5%;
- Inflation forecast for 2years is within the 6%-8% band;
Bank of Zambia Monetary Policy Committee – MPC in a media briefing has announced that the benchmark rate will be cut by 150bps to 11% with immediate effect. This is the third rate cut of the year bringing the total relaxation quantum to 450bps. The BOZ has sent a strong signal to the markets that interest rates must fall. The Committee further eased statutory reserve ratio by 300bps to 9.5% to increase money supply which should inturn be available for domestic credit purposes (lending).
The Minister of Finance earlier in the year attested to the fact that the private sector had constricted in size due to elevated interest rates. However to stimulate growth, the Bank of Zambia had to slash rates further. Zambia is on a recovery path and targets a growth rate of 4.3% in 2017. BOZ Governer Denny Kalyaya forecasts that Zambia will keep inflation in check within a 6%-8% band at least over the next 8 quarters.
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