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SURVEY ON HOW COMMERCIAL BANKS DETERMINE LENDING INTEREST RATES IN ZAMBIA

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I came to view the process by which a central bank manages the interbank rate in a different light a few years ago in a paper on the zero bound on interest rate policy. 8 Obviously, at the zero bound it is no longer possible for a central bank to operate on the interest opportunity cost spread. The spread is zero. Nevertheless, a central bank still may be said to manage the interbank rate when it is zero. Thus, something other than open market operations and the interest opportunity cost spread must matter for the implementation of interest rate policy. Irving.

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