Central Bank`s Decision To Raise Statutory Reserve Ratio Will Restrict Commercial Banks From Lending Out Money To The Private Sector

By Lomphande Muzumi

An Economist says the decision by the central bank to raise the statutory reserve ratio by 9 percent will restrict commercial banks from lending out money to the private sector.

Following the announcement by the central bank that it has raised the statutory reserve ratio to 9 percent to help arrest kwacha fall, Mr. Chibamba Kanyama explains that the measure by the bank is aimed at reducing liquidity in the market to affect demand and reduce the inflation rate therefore limiting access to money by the private sector.

In an interview with phoenix business news, Mr. Kanyama is concerned as this move will further push interest rates upwards which will eventually hurt businesses in the local industry.

The change in the statutory reserve requirements has been necessitated by the threats to inflation that recent developments in the foreign exchange market pose.

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