Bench Mark Lend­ing Rate Mar­ket Note MPC Com­men­tary

Zambian Business Times - - FINANCIAL MARKETS - Busi­ness Times Lead An­a­lyst

The bank of Zam­bia will have its first mone­tary pol­icy meet­ing for the year 2018 and we at­tach a 90% prob­a­bil­ity that the bench­mark rate will be re­laxed fur­ther by 100-150bps to 9.25%. We feel the rise in bad loan pro­vi­sions trig­ger­ing a high loan loss ra­tio will be the sole driver of a rate cut. We how­ever still be­moan the rise in av­er­age lend­ing rates cur­rently at 29.4% rep­re­sent­ing a widened spread of 925bps above cur­rent MPR. There could still be a 10% chance that the Bank of Zam­bia could leave rates un­changed to al­low 2017 rate cut ef­fects to ex­hibit the req­ui­site re­sults.

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