An analysis of Zambia’s monetary policy adjustment: The link between theory and practice

This paper provides critical analysis pertaining to the recent raised magnitude of the monetary policy rate by Bank of Zambia through the monetary policy committee (MPC) at its November 22nd to 23rd, 2021 meeting. With regards to this, discussions in this paper are aimed at deducing possible positive and negative effects of the contemporary higher monetary policy rate by linking what has been done and expected to happen (Practice), to what is conventionally expected when done may consequently happen (Theory). Thereby, employing a Practice-Versus-Theory approach will be relevant in articulating potential effects of the 50-basis point increase of the policy rate on complex market systems in Zambia. This is of fundamental importance to avoid propensities of making inferences without proper contemplation on economic phenomena.