The Bank of Zambia is further loosening its grip on the monetary policy by lowering the policy rate for the second time since its introduction in March 2012, this time from 14.0% to 12.5%. The policy rate was lowered for the first time in February 2017. The central bank also lowered the Statutory Reserve Ratio from 15.5% to 12.5%. The move signals that the economy is stabilising, as reflected in a stable exchange rate and a reduced inflation rate. It is expected to lead to lower interest rates.
The policy rate is the base rate used by banks to calculate their interest rates.
The statutory reserve ratio is the minimum amount financial institutions must maintain as liquid funds to ensure their liquidity.