Online Reporter
Rutendo Nyeve [email protected]
THE Reserve Bank of Zimbabwe (RBZ) has reaffirmed its commitment to fostering durable economic growth and gradual reduction of interest rates, provided current stability gains remain entrenched.
RBZ’s Chief Director, Dr Nicholas Masiyandima, gave the assurance during a recent business engagement in Victoria Falls.
This comes as the central bank navigates the delicate balance between stimulating economic activity and preserving the hard-won stability achieved since the introduction of the Zimbabwe Gold (ZiG) currency.
Dr Masiyandima acknowledged that Zimbabwe is emerging from a challenging economic environment.
“We’re coming from an environment of high inflation and low confidence in terms of business, low levels of growth, as well as a high parallel market exchange premium,” he said.
Dr Masiyandima explained that the central bank’s diagnosis of the previous economic challenges pointed to excessive money supply and speculative behaviour by individuals and businesses as primary drivers of instability.
Fortunately, the RBZ has managed to tame what he described as the worst enemy this country has ever had in terms of inflation, bringing it down from over 95 percent in mid-2025 to current lows of less than 5 percent.
The significant disinflation has prompted a recalibration of monetary policy.
As confirmed by the recent Monetary Policy Committee (MPC) meeting held on June 15, the Bank reduced its policy rate from 35 percent to 30 percent, while also lowering the Targeted Finance Facility rate from 20 percent to 15 percent.
Dr Masiyandima described these reductions as strategic signals to the market.
“We are communicating to business and individuals that, given the reductions in inflation and stability in the exchange rate, the central bank is also ready to come in their way to reduce interest rates,” he said.
“However, where we are still at, we can acknowledge that the interest rates remain relatively high, choking business.”
Dr Masiyandima emphasised that the central bank’s cautious approach is a deliberate policy measure aimed at balancing the challenges of the past hyperinflation and exchange rate volatility with the need for economic growth.
He said maintaining a relatively tight monetary stance is necessary to entrench the gains achieved since the ZiG’s introduction in April 2024.
“We’re trying to promote economic growth, but durable growth, which is sustainable so that the gains that we have so far had in terms of stability are entrenched, that is sustainable, until such a point that now everybody in this room and even outside has confidence and believes in the Government and the central bank that this stability is here to stay,” said Mr Masiyandima.
Drawing on international examples, the Chief Director said Zimbabwe’s approach is not unique as the European Central Bank and the South African Reserve Bank both waited approximately two years after experiencing decelerating inflation before cutting their policy rates post-Covid-19.
“When we keep the rate high, it signals to you that as a central bank, we are prioritising issues of stability so that whoever has got their ZiG in terms of savings and investment should have confidence.
“What we’re playing with the current regime is to balance between growth and stability to ensure durable economic growth,” he said.
