Melo News | Thursday, February 15, 2024 | Lusaka
Economist Naylor Kopakopa has expressed concerns regarding the Bank of Zambia’s approach to managing the economy, stating that it fails to instill confidence in finding viable solutions for the current challenges faced by the country.
During an interview with Phoenix News, Mr. Kopakopa highlights the limitations of the tools employed by the central bank, namely the Statutory Reserve Ratio and monetary policy rate, in addressing the prevailing economic conditions. He emphasizes that these mechanisms are inadequate and not suitable for rectifying the current economic situation.
According to him, the Bank of Zambia aims to demonstrate proactive measures amidst the prevailing economic turmoil. He argues that it would be incorrect to solely attribute the high inflation rate to an excessive amount of money in circulation.
According to Mr. Kopakopa, the current surge in inflation is directly impacted by the exchange rate. He believes that simply increasing the monetary policy rate is not sufficient to discourage borrowing among individuals.
In an effort to guide inflation towards the desired range and stabilize inflation expectations, the Bank of Zambia has decided to increase the Monetary Policy Rate by 150 basis points. This move raises the rate from its previous level of 11% to 12.5%. By adjusting the Monetary Policy Rate, the central bank aims to influence borrowing costs and ultimately impact consumer spending and investment, which in turn can help control inflationary pressures within the economy.
