Bank of Zambia sets up economic tone, on a serious slim gap!

CONSIDERING all factors to be in equal measure, there is a potential need to scale up on a number of economic factors, as we have seen that demand for Government securities has still remained quite high especially for the treasury bills where we have recently observed high participation levels.

However, it is ideal to foster and enhance a modality of improving credit flow into the private sector which has actually over time remained highly subdued.

Following the turn of events coupled with limited rooms to manoeuvre at the central bank, the policy rate has to be either maintained at 8.0 percent or surged a bit up to help in cushioning on the aggressive impact caused by inflation though I personally feel that this will get to harm on the financial stability if policy rate increase do occur.

Meanwhile, in the interest of safeguarding the stability of the financial sector, people's lives and livelihoods more especially that we still seen the spillover of Covid-19 pandemic, by considerations, it should have been very imperative for the central bank even though the Bank of Zambia Act does not set price stability as their focus is mainly on its overriding monetary policy objective role.

We have noted that inflation has remained quite elated contrary to the bound range of between 6-8 percent which was set for the medium-term target level. It is therefore extremely sad to note that inflationary pressures have remained high against the backdrop of having it to start moderating as per projections.

However, it is gratifying to state that inflation is expected to steadily decline if at all the policy is strongly supported with the fiscal interventions, a model can surely gravitate towards forecast horizon though this proposed idea seem to be naturally in contrast especially that we running on an election economy this year.

The committee should take keen interest with highest sense of significant worsening in economic conditions over the first quarter which has seen tight liquidity levels and the much weaker growth prospects recorded so far.

There is a strong need to push through onto macroeconomic adjustment measures which should strongly underpin a stimulus package set of monetary interventions in the short to medium, take a serious look at the models of fiscal consolidation and debt sustainability, these two elements should remain highly prioritised over the medium term and this should remain strongly impressive in promoting of the sustainable development goals.

Overnight interbank rate shows some levels of decline as liquidity conditions seem tight due to the continued uncertainty in the market, Interest rates have relative shown some levels of weakening, and Kwacha is still under stiff pressure, but showing some relative steadiness over a short term but projected to surge upward with a greater chances of depreciation within the second quarter this year.