POLICY RATE SHOULD REMAIN CONSTANT – ECONOMIST

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By BUSINESS REPORTER

THE Bank of Zambia (BoZ) should maintain the monetary policy rate at 9.75 percent to provide consistency in the economy and confidence to the international market, Economist Lubinda Haabazoka has suggested.

The BoZ is tomorrow expected to announce the latest monetary policy rate and statutory reserve ratio.

Dr Haabazoka explained in an interview that adjusting the policy rate would send a signal to market players that the country did not have a stable economy, thereby creating anxiety among players.

“It is advisable that the BoZ does not increase the policy rate, they should just maintain it at the same level to provide consistence in the economy,” he said.

Dr Haabazoka observed that the policy rate should remain constant and allow macroeconomic variables to stabilise.

He said the Kwacha had been losing value hence the need to maintain a constant policy rate.

“The reason most for the banks are not reducing is that there is still volatility in the economy and it is very risky to lend to individuals.

Given all those factors, it is wise for the policy rate to remind constant. “By keeping the policy rate constant, of course the interest rates will not reduce, ideally they are supposed to remain constant but since banks are not reducing as fast as the policy rate is falling they need to keep it stable to ensure they send a message of stabilisation in the economy,” he said.

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