February 2023 Monetary Policy Committee Statement
MPC Decision. What is Monetary Policy Between February 13th-14th the Monetary Policy Committee of the Bank of Zambia met to set the direction for Monetary Policy in the near term. Here, it was decided to raise the Monetary Policy Rate by 25 basis points from 9% to 9.25%. This marks the first alteration to the MPR by the UNPD government. Let me begin by defining monetary policy. The term refers to tools the Central Bank uses to control money supply in an economy. These tools refer primarily to the interest rate, the Monetary Policy Rate (MPR), and the reserve ratio (SRR). The MPR is the rate at which the Central Bank loans money to commercial banks, whereas the reserve ratio is the mandated percentage of deposits which banks are to keep at the Central Bank. Hawkish The stance by the Bank of Zambia in the recent meeting reflects a largely contractionary monetary policy. What this signifies is simply an attempt to reduce money supply. This approach is most often adopted during times of in...