Posted by Benson on May 22, 2017

 

The Bank of Zambia (BoZ) has significantly reduced its Policy Rate to 12.5 per cent from 14.0 per cent, bringing a new lease of hope for Commercial Banks to also trigger reductions in the lending rates.

The announcement was made on Wednesday 17th May, 2017 by Central Bank Governor Dr. BoZ’s Monetary Policy Committee (MPC) factored in the lower inflation and subdued economic growth for the reduction to be effected.

He said the Committee took into account the following factors in arriving at its decisions:
The continued decline in inflation, with the inflation forecast to remain well below the 2017 target of 9.0% and within the medium-term target range of 6-8% by early 2019;

The prevailing high lending rates, which continue to constrain access to credit by the productive sectors of the economy, as reflected in the sustained contraction of credit to the private sector;

Deterioration in commercial banks’ assets, reflected in rising NPLs to 10.6% in March 2017 from 10.0% in December 2016; and

Subdued economic growth.

Denny Kalyalya, and in effect drops the policy rate by 150 basis points.

The Central Bank has also dropped the Statutory Reserve Ratio to 12.5 % from 15.5%.

Dr. Kalyalya said.

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