INSTRUCTIONS:

1. The maximum number of pages is TEN (10), excluding references and the cover page.
2. The minimum number of references is FIVE (5) (including textbooks, journal articles, and other sources)

QUESTION

The Zambian economy has been facing significant macroeconomic challenges as reflected in low growth, high fiscal deficits; rising inflation and debt service obligations as well as low international reserves. The outbreak of Coronavirus (COVID-19) pandemic has compounded the situation, resulting in unprecedented global public health and economic crises. Although the full impact of the COVID-19 shock on public health and the economy cannot be determined at the moment, indications are that it will be unprecedented. The Bank of Zambia has introduced a number of measures to address the impact of the pandemic on the economy.

The Monetary Policy Committee (MPC), at its May 18 -20, 2020 meeting, decided to lower the policy rate by 225 basis points to 9.25%. The Bank has also introduced a K10 billion stimulus package to give the economy a boost.

Required: Critically analyse the performance of the downward revision of monetary policy in May 2020 and the Targeted Medium-term Refinancing Facility on the Zambian financial markets.