RBZ credits tight money supply for rare economic stability
… vows to “stay the course” on restrictive policy as inflation slows, reserves swell
LIVINGSTONE MARUFU
The Reserve Bank of Zimbabwe (RBZ) has hailed its tough monetary stance as the driving force behind the rare spell of economic stability, pledging to maintain liquidity restraints even as inflation cools and foreign currency reserves hit multi-year highs, Business Times can report.
Governor John Mushayavanhu said the combination of “prudent money supply management, increased foreign currency inflows, and accumulation of reserves” had allowed households and businesses to plan beyond the short term in an economy long scarred by volatility.
“As such, the combination of prudent money supply management, increased foreign currency inflows, and accumulation of foreign currency reserves resulted in continued stability in inflation during the third quarter of 2025,” Mushayavanhu said after last week’s Monetary Policy Committee (MPC) meeting.
Monthly ZiG inflation averaged just 0.6% between February and August, while annual inflation slowed sharply to 82.7% in September from 93.8% in August.
The central bank projects inflation to ease further towards 20% by December.
The tightening has been reinforced by swelling foreign inflows, which climbed 26.8% to US$10.4bn as of August, buoyed by gold and tobacco exports. Reserves rose to nearly US$900m by late September, from just above US$700m three months earlier, strengthening the RBZ’s capacity to defend the currency.
The MPC resolved to keep the interest rate at 35% and statutory reserve requirements unchanged, underscoring its resolve to avoid liquidity injections.
“Considering the foregoing, the MPC has resolved to continue to stay the course of the current monetary policy stance during the next quarter to durably anchor price and exchange rate stability in the economy,” Mushayavanhu said.
Economists argue the discipline is starting to restore credibility.
“Month-on-month inflation has slowed consistently since mid-year, which is evidence that monetary reforms are having a positive impact,” said economist Tinevimbo Shava. “Of course, the annual figure remains high at 82.7%, but what matters is the downward trend, which shows policy traction.”
Others agree the trend points to traction in reforms.
However, the Zimbabwe National Chamber of Commerce (ZNCC) said the liquidity squeeze is choking companies’ ability to operate and honour their obligations.
“Many companies are struggling to meet their ZiG obligations due to the funding shortfall. This has disrupted operations across industries, and the central bank must act swiftly to mitigate further economic strain,” ZNCC chief executive officer Christopher Mugaga said.
