Monetary Policy Rate giving good effects

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A Social Economist Kelvin Chisanga says the 9.0% Monetary Policy Rate is still giving out good effects as the Bank of Zambia has maintained it for the third time.

Mr Chisanga stated that the 9.0% Monetary Policy Rate is strongly impinging on the inflation patterns which is strongly accompanied by current economic happenings.

He has however noted that, the Monetary Policy Committee (MPC) of the Bank of Zambia (BOZ), has based their assessment mainly on the prevailing macroeconomic conditions and outlook which are currently taking shape, and has to this end, decided to maintain status quo with regard to the policy rate sitting at 9.0% for the third consecutive time with typical considerations weighing on the current economic dimensions from many angles.

Mr Chisanga said that the policy rate has however been made unchanged at 9.0%, it is strongly generating from the bearing effect being witnessed and obtained from the November Monetary Policy Rate, as it remains such an important aspect to maintaining accommodative model of credit flows to business and investment as they are now picking up with some economic activities.

“It quite significant to see that this is coming out so strongly as a necessary tool to be used in reviving the speed observed in the domestic economy,” he said

He added that the Monetary Policy Rate stance is seen to have done a bit of heavy lifting in a way, as it has sustained some spots of steady growth patterns on a durable basis within the short-term, and continues to help in mitigating the impacts of various risks as well, especially those poised on both local and global economies, while also it is ensuring that inflation remains anchored within the target boundaries moving forward.

He cited that the underlying rationale for maintaining the status quo on the policy rate is to support the recovery process in the building up of aggregate demand, which is now hinging on the gradual pick up with the private investment, though the overall economy is still covering up slowly.

Mr Chisanga alluded that it is well cognizant to state that the Bank of Zambia Monetary Policy Committee has regarded the prominence of headwinds emanating from global developments, as the main precursor to risk affecting on the domestic outlook as done by stakeholders such as International Monetary Fund (IMF) and the World Bank.

“This also is now somewhat clouded by both upside and downside risks of Russian-Ukraine effects as well as with some lingering conditionalities emanating from the COVID-19 impacts among many other things such as oil pricing dynamics etc.” he said

“As a matter of peculiar interest, many may ask about the policy rate, and I will try to labour in a few sentences by stating that the policy rate is a benchmark in which most financial or non-financial institutions use to peg their pricing structures,” he noted

Mr Chisanga cited that the policy rate has a strong effect in strengthening businesses and wider investment, as it has a strong transmission to credit lines, and it supports strongly on the businesses as well as on broader productive investments.

“I would simply say that, all our loans with various financial companies or firms filter through this particular policy rate as a basis of pricing model,” he noted


  1. There is practically no money in circulation. Increasing the policy rate would have pushed the interest rate higher making money more expensive to get.
    Inflation rate is already vigorously fought, only last month did we see it rise. BOZ didn’t want to fix what’s not broken, by raising the MPR.

  2. There is absolutely no empirical evidence that the MPR has any effect on the inflation rate in Zambia. Please speak publicly on matters where you have solid evidence. Any causation/attribution as you state is simply anecdotal or coincidental.

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