Thu, 22 Feb 2018 09:26:14 +0000
By MAILESI BANDA
THE Bank of Zambia (BoZ) has lowered the monetary policy rate to 5.0 percent from 10.25 percent while the statutory reserve ratio has been reduced to 5 percent from 8 percent.
Bank of Zambia governor, Denny Kalyalya said the reduction was aimed at supporting growth in the financial sector as well as promoting the financial systems stability.
The central bank governor announced that the country’s economic activities had continued to improve but that the growth had remained below the potential growth.
Dr. Kalyalya was speaking at a media briefing on the outcomes of the Monetary Policy Committee meeting which took place from February 19 to 20.
He said the projection for the rate of inflation in the next eight quarters would remain around six to eight percent.
“As inflation is currently projected to remain around the lower bound of the 6 to 8 percent target range over the next eight quarters, the MPC at its recent meeting decided to further lower the policy rate by 50 basis points to 9.75 percent from 10.25 percent. “The statutory reserve ratio has also been further reduced by 300 basis points to 5.0 percent from 8.0 percent,” he said.
Dr Kalyalya noted that preliminary data from 2017 indicate that Governments fiscal deficit at 6.1 percent of Gross Domestic Product was below the 2017 budget target of 7.0 percent of GDP.
He explained that containing that budget deficit and the overall debt including domestic arrears to sustainable levels remained critical to consolidating macro-economic stability.
“The Bank of Zambia will closely monitor domestic and external sector developments and stands ready to implement appropriate measures to maintain price and financial system stability and ultimately support economic diversification and growth,” he said.
Dr. Kalyalya noted that credit to the private sector had continued to improve but modestly.
