Policy Monitoring and Research Centre(PMRC) Executive Director Bernadette Deka has commended Bank of Zambia(BoZ) for reducing the policy rates from 12.5% to 11%.
Ms Deka said in interview that the reduction in the policy rate has the potential to alter short-term interest rates in an economy, thereby influencing a level economic growth and inflation.
She says low policy rate signifies economic growth, of which it may lead to slight but minimal increases in inflation in some cases.
Ms. Deka said statutory reserve ratio is the rate at which commercial banks require to maintain liquid assets as a prerequisite to providing credit to customers.
She has since urged government to speed up its efforts on measures to improve fiscal consolidation which is critical to achieving macroeconomic stability.
Ms. Deka said government needed to focus on revisions to the Public Finance Act.
She said the above measures together with other structural reforms such as the full roll out of Integrated Financial Management Information System (IFMIS), enhancement of cash management and reduction of short term borrowing will greatly contribute to government’s efforts in achieving a sustainable economic recovery and growth.