Online Reporter
Rutendo Nyeve [email protected]
THE Treasury has announced that Zimbabweans can expect an adjustment of the interbank policy rate by the Monetary Policy Committee (MPC) in the coming months, as the Government moves to support economic growth while safeguarding price stability and maintaining single-digit inflation.
This comes as the Second Republic’s strategic initiatives to establish a gold-backed foundation for the economy are producing positive outcomes.
On Monday President Mnangagwa visited the Reserve Bank of Zimbabwe (RBZ) headquarters in Harare to inspect the amount of gold reserves the country has.
He was impressed after being informed that gold reserves now stand at 4,48 tonnes, making Zimbabwe the third country in SADC with the largest reserves and 11th in Africa.
President Mnangagwa has said Zimbabwe’s gold and foreign currency reserves would ensure that the ZiG remains fully backed and resilient to global economic shocks.
Two years ago, the President directed that the country accumulate mineral royalties in physical form, and this has led to a considerable increase in reserves.
This, coupled with prudent monetary and fiscal policy reforms has ensured that Zimbabwe sustains a stable macro-economic environment conducive for business viability while promoting investments and savings.
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, signalled the policy rate review on Wednesday as he commended the Government’s reform measures while acknowledging that the current high policy rate cannot hold forever.
The interbank policy rate, also known as the Bank rate is the interest rate at which the Reserve Bank of Zimbabwe lends money to commercial banks.
When this rate is high, banks also raise their lending rates on loans, making borrowing expensive for businesses and individuals.
Conversely, a lower rate encourages borrowing, spending and investment while boosting aggregate demand.
The Bank rate is at 35 percent, a level the RBZ hiked in September 2024 alongside a 30 percent reserve requirement for both local and foreign currency to curb excess liquidity and speculative activities. Prof Ncube said these tough measures have borne fruit.
“We need to applaud the Government’s efforts to stabilise the exchange rate and inflation we are seeing today. This did not happen overnight, but it has been a long journey, arising from reform measures implemented by the Government working closely with the Central Bank,” he said.
“These reforms include fiscal consolidation and tight monetary policy with the sole objective of restoring macro-economic stability.
“On its part, the Reserve Bank of Zimbabwe hiked the Bank rate to 35 percent and the reserve requirements to 30 percent for both local currency and foreign currency in September 2024 to curb excess liquidity in the economy, and anchor inflation expectations, as well as to reduce speculative activities,” he added.
“As a result, the exchange rate has been stable since October 2024, while inflation was on a downward trend to the current levels of single-digit of 4,1 percent in 2025,” said Prof Ncube.
However, he acknowledged that the policy rate remains high relative to current inflation.
“Yes, we fully acknowledge that the policy rate is high given the current levels of inflation and we understand why that decision was taken in the first place. Empirical evidence points to the fact that early loosening of the monetary policy could result in inflation resurgence, hence the Monetary Policy Committee is exercising caution not to loosen monetary policy prematurely,” he said.
Prof Ncube expressed confidence that the MPC will begin reducing rates, but in a measured fashion.
“With the current low inflation, we expect the MPC to begin easing the policy rate gradually, while monitoring market developments. This measured approach is intended to support economic growth while at the same time safeguarding price stability,” said Minister Ncube.
He said this has to be done without reigniting inflationary pressures, ensuring that inflation remains within the single-digit levels.
“These are not easy decisions. They are tough, but they are necessary. Without stability, there can be no sustainable economic growth. Stability gives us the space to support recovery and move towards long-term economic growth in a disciplined and orderly manner,” said Prof Ncube.
Meanwhile, in an interview with Zimpapers, Monetary Policy Committee member and economist Dr Persistence Gwanyanya, speaking in his personal capacity, did not rule out a rate review but stressed the need for a cautious approach.
“I think the MPC in its communique has been very clear about the approach to adjusting the interest rates. That the interest rates are going to be guided by the progress in inflation dynamics, but when we speak about inflation dynamics, we also speak about how the inflation expectations are anchored,” Dr Gwanyanya said.
He warned that multiple factors beyond domestic inflation must be considered.
“Inflation might go down, but we always want the expectation about future inflation to be more anchored.
He highlighted geopolitical tensions, including the war involving Iran and Israel, as well as Zimbabwe’s multiple currency regime as critical factors.
Dr Gwanyanya said any loosening must be well-calibrated.
“You want any extra liquidity created from the loosening to be absorbed by the demand for the local currency, which is the job of the Monetary Policy Committee. When the Monetary Policy Committee meets in June, they will make a decision relating to the adjustment of the policy rate, in a more considerate, well thought out manner,” he said.
