STATUTORY RESERVE RATIO RAISED FOURTH TIME IN A YEAR

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STATUTORY RESERVE RATIO RAISED FOURTH TIME IN A YEAR

By Prudence Chota

The Bank of Zambia has adjusted upwards the statutory reserve ratio on both local and foreign currency deposits, including government deposits and vastro accounts deposit by 9 percent from the current 17.0 percent to 26.0 percent effective 5th February 2024.

This is the 4th time that the central bank has increased the statutory reserve ratio in 13 months.

By increasing the statutory reserve ratio, the central bank will reduce money supply more directly by pulling 9.0 percent of the kwacha (liquidity) out of the system, and placing upward pressure on the domestic currency, which could in turn help ease imported inflation.

Currently, Zambia’s inflation increased to 13.2 percent in January 2023 and is likely to increase in coming months due to several factors, among them; continued depreciation of the Zambian kwacha and the increase in fuel pump prices which may trigger an increase in cost of transport fares, goods and services.

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