A Monetary Policy Committee statement dated 1st April, 2020 has shown that the committee resolved to cut the Liquidity Reserve Requirement (LRR) on domestic deposits by 125 basis points to 3.75% from 5.0%, therefore increasing all commercial banks’ liquidity by K12 billion.

The statement, signed by chairperson of the committee and Reserve Bank Governor Dalitso Kabambe, says that the development is attributed to easing the banks liquidity amidst the coronavirus pandemic. “These decisions were deemed necessary to ease banking system liquidity constraints and incentivise commercial banks to adequately support the sectors that are hit by the COVID-19 pandemic,” says part of the statement.

On the other hand, the committee also resolved to reduce the Lombard Rate (interest rate charged by central banks when providing short-term loans to commercial banks) by 50% to 0.2 percentage points above the Policy Rate to reduce the cost of accessing funds from the Central Bank.

Last week RBM announced that it has formed a special taskforce to monitor possible impacts of Covid-19 on the country’s economy. “The taskforce will be looking at each aspect that is being affected by the coronavirus” said RBM Spokesperson Mbane Ngwira.