RBZ maintains tight monetary policy stance amid ZWL shortages

The Reserve Bank of Zimbabwe (RBZ) has held the benchmark interest rate to give time for the instituted economic stabilisation measures to have their full effect on the dual currency economy in light of the recent positive developments in inflation and exchange rates.

In June this year, the RBZ raised its policy interest rate from 140 percent to 150 percent per annum in an effort to tame inflation.

The apex bank also increased the medium-term bank accommodation interest rate from 70 percent to 75 percent per annum.

The Apex Bank Governor John Mangudya, in a statement, expressed satisfaction with the results of the actions that have steadied the domestic market and exchange rate.

The Monetary Policy Committee (MPC) expects month-on-month inflation to continue to decline in the outlook period to December 2023.

“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.

“The MPC is 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,” Mangudya said.

In accordance with monthly developments in inflation and monetary circumstances, the MPC will continue to periodically evaluate its monetary policy actions.

Inflation on a monthly basis, which peaked at 74,5 percent in June 2023, dropped to negative 15,3 percent in July 2023, while inflation on an annual basis decreased from 175,8 percent in June 2023 to 101,3 percent in July 2023.

Volatile exchange rate and inflation has resulted in pricing headaches for businesses in Zimbabwe with some resorting to forwarding pricing in an attempt to protect their businesses, in the process, seriously affecting consumers of their goods and services.-ebusinessweekly