dyton mupawaenda
Tapiwanashe Mangwiro-Senior Business Reporter
The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (RBZ) has kept the bank policy rate at 20 percent and maintained the tight monetary policy stance in its quest to sustain the prevailing economic stability.
Emphasising the importance of existing measures in fostering a stable economic environment, while keeping most policy provisions unchanged, the MPC stressed its commitment to proactively addressing any emerging risks.
Having kept the bank policy rate at 20 percent per annum, the MPC also maintained an interest rate corridor of 11 percent to 25 percent. The statutory reserve requirements for demand deposits, as well as savings and time deposits in Zimbabwean dollars (ZiG), will also remain at 15 percent and 5 percent, respectively.
Additionally, the foreign currency statutory reserve requirements for demand deposits and savings and time deposits were retained at 20 percent and 5 percent, respectively.
“These measures reflect the RBZ’s strategy to ensure that the growth in money supply aligns with the pro-growth inflation target of 5 percent,” the RBZ said in a statement on the resolutions of the MPC yesterday.
By keeping the bank policy rate unchanged, the MPC aims to balance the need for economic growth with the imperative of controlling inflation.
The MPC said the stabilisation measures implemented by the bank since the beginning of April 2024 have already shown significant results.
According to the committee, these measures have led to a month-on-month Zimbabwean dollar (ZiG) inflation rate of -2,4 percent in May 2024, a notable achievement in the context of the country’s economic challenges.
The inflation rate is expected to be around 0 percent in June 2024, driven by declines in both food and non-food inflation. “The measures we have taken are yielding the desired results, with inflation coming under control faster than anticipated,” the RBZ said.
Looking ahead, inflation pressures are expected to remain subdued during the outlook period, with projected inflation to end the year below 5 percent. This optimistic forecast is underpinned by the stability of the exchange rate, which has been a critical factor in managing inflation.
“We are committed to ensuring that the growth in money supply remains consistent with our pro-growth inflation targets,” the central bank emphasised, reinforcing its strategy to maintain economic stability.
The success of these measures demonstrates the RBZ’s capability to implement effective monetary policies that foster economic stability.
“Our proactive approach will continue to address any emerging risks, ensuring that we maintain the current stability,” the apex bank assured.
By keeping inflation in check and supporting a stable exchange rate, the RBZ is laying a strong foundation for sustainable economic growth in Zimbabwe.
The MPC reiterated its commitment to backing reserve money with gold, other precious minerals, and foreign currency reserves. This policy is intended to bolster the growth of reserve money in a manner that supports economic activity and strengthens the reserves backing the domestic currency.
In its statement, the MPC highlighted its readiness to address any risks that might threaten the current economic stability.
“Going forward, the MPC fully commits to proactively address any emerging risks on current stability. The MPC will ensure that growth in money supply remains consistent with the achievement of the envisaged pro-growth inflation levels of 5 percent,” the statement read.
Through maintaining these monetary policies, the RBZ aims to create a conducive environment for sustained economic growth while safeguarding against inflationary pressures. The decision to keep rates unchanged signals the RBZ’s confidence in its current policy framework and its dedication to maintaining stability.
As the global economic landscape remains uncertain, the RBZ’s cautious approach is designed to ensure that Zimbabwe’s economy remains resilient and poised for sustainable growth.
Online Reporter