Make monetary policy more accommodative of the industry

Today, the Reserve Bank of Zimbabwe Governor John Mushayavanhu presents the 2026 Monetary Policy Statement (MPS)

He does so from a position of relative strength. Inflation has fallen sharply into single digits. The Zimbabwe Gold (ZiG) currency has enjoyed an unusual stretch of exchange rate calm. After years of turbulence, the narrative has shifted from crisis firefighting to consolidation.

Yet stability, however welcome, is not an end in itself. It must translate into production, investment and jobs. And that is where the policy debate now sharpens.

Should monetary authorities maintain a tight monetary stance or cautiously recalibrate toward a growth-compatible framework?

The central bank faces a delicate balancing act. On one hand, respected economists such as Eddie Cross and Professor Gift Mugano argue that it would be premature to ease policy on the basis of a single-digit inflation print.

Their logic is sound.

Zimbabwe’s history is littered with episodes where early celebration gave way to renewed instability.

Inflation expectations are fragile. Confidence, once broken, takes years to restore.

But there is another risk policymakers must now confront, the risk of overcorrection.

The current policy rate of 35%, alongside a statutory reserve requirement ratio of 30%, has undoubtedly tightened liquidity and anchored expectations.

It has also raised the cost of capital to punishing levels.

Across manufacturing, agriculture and commerce, borrowing is not merely expensive, it is prohibitive.

Companies that survived currency volatility and inflation shocks now find themselves squeezed by financing costs that erode margins and stifle expansion.

Price stability without production stability is an incomplete victory.

Business leaders have warned that the burden of tight policy is falling disproportionately on the formal sector.

Elevated effective tax rates, high transaction costs and steep borrowing rates combine to penalise compliant firms.

Meanwhile, large volumes of currency circulate outside the banking system, deposit mobilisation remains weak and parallel pricing frameworks persist.

This asymmetry distorts incentives. Rational actors migrate toward informality, shrinking the tax base and weakening monetary policy transmission. When compliant businesses struggle while informal operators thrive outside regulatory oversight, macroeconomic stability becomes structurally fragile.

To be clear, no serious voice is calling for reckless money creation or an abrupt collapse in interest rates. The lesson of the past decade is too painful.

However, consolidation does not require rigidity.

A forward-looking MPS should begin to outline a conditional easing path, not an immediate slashing of rates, but a transparent roadmap linking further disinflation and exchange rate stability to gradual policy relaxation.

Monetary credibility is strengthened not only by firmness, but by predictability.

The 2026 MPS is an opportunity to signal that Zimbabwe is entering a new phase, one where stability is preserved, but growth is enabled.

A rigid posture risks suffocating the very productive sectors that stability was meant to protect.

All eyes will be on whether the central bank doubles down on restriction or begins to sketch a credible, disciplined path toward accommodation.

The challenge is not to abandon prudence. It is to ensure that prudence does not become paralysis.

Zimbabwe has fought hard for stability. It must now make that stability work for industry.