Monetary policy rate hike backed
A Kitwe based economist says the increase in the monetary policy rate from 12.5 to 15.5 Percent as announced by the Bank of Zambia will cushion the volatility in the exchange rate.
Lubinda Habaazoka says the measure will also mean that there will be reduced demand for foreign exchange.
He says more people are expected to bring in money into the country and buy Treasury bills.
Dr. Habaazoka added that the theory states that people always want to buy Treasury bills from countries with a higher policy rate.
He further said the country is expected to see price stability because many people will be discouraged from borrowing.
The Bank of Zambia yesterday announced an adjustment in the monetary policy rate from 12.5 to 15.5 percent.