An economic and financial analyst has welcomed the decision by the Bank of Zambia (BoZ) to maintain the monetary policy rate at nine percent.
Zambia National Commercial Bank (ZANACO) Economist, Patrick Chileshe, said the decision means that the cost of loans will remain the same to the borrowers, a development he said was positive for the economy.
Dr. Chileshe said maintaining the monetary policy rate is good for a better economy as the level of inflation will reduce thereby stabilising the economy.
He said lenders such as commercial banks will adjust their lending and interest rates downwards.
Dr. Chileshe explained that this will cause many borrowers to flock to banks to get loans to start or grow their businesses.
He added that the Central Bank’s decision to maintain the monetary policy will promote liquidity, which means more cash flow will flood the market.
Dr. Chileshe explained that an increase in cash flow on the market is a good signal for the country to attract investors.
He explained that if inflation keeps on skyrocketing, few people will put the money in banks, making it difficult for the commercial banks to lend to borrowers for their investments.
“This is a signal that inflation will keep going down and more people will run to banks to deposit and borrow for their investments resulting in liquidity and price reduction in goods and services,” he said.
Dr. Chileshe further said the decision by the Central Bank will also spur confidence in the investors who will in turn invest in financial assets such as government bonds among others.
This week, the Bank of Zambia maintained the monetary policy rate at nine percent thereby restoring confidence in the Zambian people especially the business community.
Good to see this upnd cadre Chileshe is still Alive
I disagree with the Doc, this is “ceteris paribas”, in the army it is “as you were”. How does as you reduce inflation? I think it keeps it where it is, unless there is something that is coming and he is not telling us. In my opinion, no one will flock to the banks for loans and the economy will be as it is (Stalled).
If and when CDF is disbassed next month, the inflation rate is expected to rise and thus cause the Kwacha to depreciate, fuel price will also go up and the cycle continues.
In politics, throwing the taxpayers’
money at disasters is supposed to
show your compassion. But
robbing Peter to pay Paul is not
compassion. It is politics.
Thomas Sowell
The decisions rationale is in the MPC that inflation rate has seen downward trend though global Inflation is expected to continue showing signs of upward trend it will continue showing that trend may until 2024 Local conditions presented could be within those consensus expectations anything 9% to 9.25% and moderating growth better than reducing Inflation local could be better aligned to 9% otherwise it could be 9% to 9.25% We may need to invest in this but it’s okay for now but it’s yet to be seen in global price rising next target the presentation was fairly okay but could be more for me 9.25% could be best forecast but members could have scored average 9% giving basis
Breakeven Inflation!!