The Reserve Bank of Zimbabwe (RBZ) has maintained the bank policy rate at 200% due to the positive impact of the recent policy measures but will review the rates in the first quarter of next year, central bank chief John Mangudya has said.
In a statement, Mangudya said the bank’s Monetary Policy Committee (MPC), which meet last week, was “pleased with the improved business confidence owing to the prevailing stability in the economy” and unanimously agreed to stay the course of a tight monetary policy until Q12023.
“[The committee] resolved to maintain the Bank policy rate and medium-term lending rate at current levels of 200% and 100%, respectively and to review the interest rates in the first quarter of 2023 as dictated by inflation developments,” Mangudya said.
The committee, he said, agreed to further liberalise the foreign exchange market in the first quarter of 2023 and to enhance efficiency in the operation of the foreign exchange auction system and the willing-buyer willing-seller foreign exchange mechanism.
The committee also agreed to continue supporting the productive sectors of the economy through the Medium Term Lending Facility [which the Bank will increase in 2023 to ZWL$20bn from the current limit of ZWL$10bn under which micro, small and medium enterprises, individuals and the productive sectors of the economy can borrow at interest rates applicable from time to time.
Mangudya said the MPC also noted the progressive decline in monthly inflation, from a peak of 30.7% in June 2022 to 1.8% in November 2022, which has seen annual inflation fall from 285% in August 2022 to 255% in November 2022.
The Committee expects that the economy will grow by 4% in 2023 and that inflation will remain stable at below 3% per month throughout the year.