The Minister of Finance, Dr Situmbeko Musokotwane, categorically stated in Parliament that the changes in statutory reserve ratio have zero impact on interest rates.
The rules of supply and demand dictate that if demand outstrips supply prices will go up. Increase in statutory reserve ratio means reducing monetary supply and hence prices go up through interest rate transmission on new loans. How can the Minister say there is no correlation?
Does the Minister, who is an economist, categorically say the rules of supply and demand will not affect interest rates?
Fred M’membe ,
President of the Socialist Party