Ladies and Gentlemen, in order to achieve efficient allocation of resources and to promote savings and investment, there is need to achieve and sustain low and stable interest rates. As earlier indicated, it is worth noting that lending interest rates have trended downwards in the recent past owing to the reduction in inflation. Low and stable interest rates would create conducive credit conditions, which would improve accessibility and availability of credit to the productive sectors. This would result in expansion in investment, increased production as well as enhanced value addition. This ultimately leads to sustainable economic growth required to accelerate poverty reduction in our country. Mr. Chairman, another aspect of the Bank of Zambia mission is that of ensuring financial system stability. As you may be aware, financial system stability is very critical to the maintenance of macroeconomic stability. As a matter of fact, monetary policy would not be effective in pursuing the inflation objective if the financial system were not stable, as monetary policy actions are transmitted through financial institutions. In this regard, the Bank of Zambia will continue with its efforts of ensuring stability in the financial sector. A stable financial system plays a catalytic role for financial institutions to provide the financial products that will contribute to the development of the insurance business. In this instance, the Bank will continue to support local financial institutions in their efforts to mobilise increased savings particularly domestic, which should go towards sustained financing of the future productive activities in our economy.
Charles Bean: The Monetary Policy Committee’s policy dilemma Speech by Mr Charles Bean, Deputy Governor for Monetary Policy of the Bank of England, at the Association of British Insurers’ (ABI) Economics and Research Conference, London, 3 March 2011. *  *  *  Almost three years ago, in April 2008 when the financial crisis was still in its early days, I gave a speech entitled “Walking the Tightrope” 1 . In that speech, I noted that the United Kingdom was faced with an unenviable conjunction of developments. On the one hand, the dislocation in credit markets was weighing on demand. In due course, that could be expected to put downward pressure on inflation. On the other hand, rapid growth in the emerging economies, especially in Asia, had put upward pressure on oil prices, which went on to peak at nearly $ a barrel in July of that year. Higher oil prices were squeezing demand too, but were adding to, rather than reducing, inflation. In the face of these twin forces, activity began to fall, but consumer price inflation rose sharply, reaching 5.2% in September. For the first eight months of that year, the Monetary Policy Committee was faced with setting interest rates so as to balance the risk of downward pressure on inflation from a sharp slowdown in growth associated with the financial crisis, against the risk that the period of high oil prices and elevated inflation would result in a wage-price spiral.