Business

BAZ hails central bank move

KABANDA CHULU, Lusaka
THE Bankers Association of Zambia(BAZ) says removal of restrictions on commercial banks’ access to the Bank of Zambia Overnight Lending Facility (OLF) will not result in the immediate decline in lending rates since banks are still sitting on highly priced short term deposits.
Recently, the Central Bank signalled a reduction in lending rates that are over 40 percent on average, following the immediate removal of restrictions on commercial banks’ access to its OLF.
This means that commercial banks will now access enough money at lower price on the interbank platform.
Welcoming the measures announced by the Bank of Zambia (BoZ) aimed at easing access to liquidity, BAZ chief executive officer Leonard Mwanza said the development will enable banks have access to liquidity at a lower price.
He said the interbank platform is now trending downwards and hovering within the Monetary Policy Rate (MPR) which has remained at 15.5 percent.
“A drop in lending rates may not pass through immediately as banks are sitting on highly-priced short term deposits but once maturity kicks in, we expect to have an immediate pass back and this may start reflecting in the first quarter of 2017.”
He said banks will now have easy access to lower priced funds to enable them (banks) have better capacity to lend on short term at lower margins.

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