The Bank of Zambia has again maintained the Monetary Policy Rate and Statutory Reserve Ratio in a bid to induce lower interest rates and continue supporting economic growth.
Speaking during a media briefing in Lusaka, Wednesday, BoZ governor, Dr Denny Kalyalya, announced that the central bank decided to maintain the Monetary Policy Rate (MPR) at 9.75 per cent, while also keeping the Statutory Reserve Ratio (SRR) at five per cent, for the third successive time this year.
This means that the MPR and SRR have remained at the same level throughout the year after having closed 2017 at 10.25 per cent.
The MPR is the benchmark lending rate the central bank sets on commercial banks to either increase or decrease interest rates on credit facilities, while the SRR is the proportion of deposits a commercial bank, by law, must keep in cash or place with the central bank.
Dr Kalyalya explained that the central bank decided to maintain the MPR and SRR to continue supporting the country’s economic growth, while also induce the lowering of high interest rates obtaining on the local market that averaged around 23 per cent in the third quarter, from 24.3 per cent in June.
“Lending rates have come down, but the concern we have is that, but at that level, is it not too high to stimulate economic growth? So, these high rates also have implications on those who have borrowed. So, we are happy that it is coming down, but we want it to come down a lot faster,” Dr Kalyalya told journalists at the central bank.
“Indicators of economic activity suggest that economic growth remains subdued with heightened downside risks. Credit to the private sector continued to recover albeit at too low a pace to stimulate significant economic activity.”