The Bank of Zambia has introduced the monetary policy rate {MPC) initially set at 9.0% and which has since moved up to 15.5% as of may 2016. a. What is the purpose of the monetary policy rate and what factors are considered in its determination? b. what are the reasons for the introduction of the policy rate, highlighting both the merits and demerits of this measure and the significance of the policy rate in relation to other monetary policy measures?
The Bank of Zambia has introduced the
which has since moved up to 15.5% as of may 2016.
a. What is the purpose of the monetary policy rate and what factors are considered in its
determination?
b. what are the reasons for the introduction of the policy rate, highlighting both the merits
and demerits of this measure and the significance of the policy rate in relation to other monetary policy
measures?
c. Discuss the implications of the increase in the policy rate from 9.0 to 15.5 % on the
financial market and on the Zambian economy in general. What factors may have
prompted the increase and what is the likely direction of the movements in the rate
going into the second half
of 2016? What factors are likely to weigh on the movements?
Step by step
Solved in 3 steps
