Chronicle Editor
Judith Phiri, Business Reporter
POLICY measures put in place by the Government and the Reserve Bank of Zimbabwe (RBZ) to stabilise the economy, are paying dividends as month-on-month inflation and annual inflation continue tumbling.
The month-on-month inflation, which peaked at 74.5 percent in June 2023, fell to minus 15.3 percent in July, while annual inflation fell from 175.8 percent in June 2023 to 101.3 percent in July.
The Monetary Policy Committee (MPC) which met on Friday to review the effectiveness of the recent policy measures put in place by both Government and the Bank to stabilise the economy, expressed satisfaction with the impact of the measures which have stabilised the exchange rate and domestic prices.
In a statement announcing the resolutions of the MPC, the Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya said strong economic fundamentals enhance confidence in the economy.
“The MPC expects month-on-month inflation to continue to decline in the outlook period to December 2023. The MPC also noted that economic fundamentals are strong to sustain the current stability, as reflected by the robust economic growth of 5.3 percent expected in 2023, a favourable balance of payments position and fiscal sustainability,” he said.
“The strong economic fundamentals, coupled with stability in prices, will be critical in preserving the value of the domestic currency and enhancing confidence in the economy.”
He said in view of the current positive inflation and exchange rate developments, the MPC resolved to stay the course of the current tight monetary policy stance and allow time for the current measures to take the full course of their impact on the dual currency economy.
Dr Mangudya said the MPC was strongly committed to remaining watchful of any potential shocks and putting in place appropriate safeguard measures to ensure that the economy remains on track to achieving price and exchange rate stability to support the strong economic fundamentals.
“The MPC will continue to review monetary policy measures on a regular basis in line with month-on-month inflation developments and monetary conditions.”
This comes at a time the Zimbabwe dollar continues to strengthen against the US dollar with major businesses reacting to the changes by a considerably reducing their prices in local currency.
On Tuesday, on the wholesale foreign exchange auction for retail, the Zimbabwean dollar further strengthened as the weighted average rate was pegged at ZWL$4 505 against US$1. The previous week it had been pegged at ZWL$4 537 against US$1 on the wholesale foreign exchange auction for banks.
This is a further indication of the market’s positive response to a series of policy interventions put in place by monetary authorities to mop up excess local currency liquidity.
Over the past few weeks, the Zimbabwe dollar has been fast regaining its value against the US dollar, taming prices of basic goods that had gone up sharply in the last few months after the Zimbabwe dollar suffered heavy losses on the official exchange market.
Online Reporter