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Monetary policy is being hampered by Fiscal Policy – Analyst

A Financial Analyst has charged that Monetary policy in Zambia is being hampered by Fiscal policy which is causing the landing rates by the banks to be high.
Munyumba Mutwale of Nikiwa Capital Partners says the difference between the government bond rate standing at 30 percent while the Monetary policy rate is at 9.75 percent is too high.
Mr. Mutwale says the monetary policy is being driven by the high rates at which the government borrowing.
He says the rate by the central bank is as accommodative as it can get as the country is at the edge of the inflation target mark of 6 to 8 percent.
Mr. Mutwale advises that government should bring themselves more into the fiscal sustainability and drastically reduce their rates closer to the rate of the central bank which is currently being rendered ineffective.
This follows reports by some analysts indicating that monetary policy has a crunch on the financial markets which limits credit flow to the private sector and hence causing the poor performance of the economy.

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