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.