The Reserve Bank of Zimbabwe (RBZ) has maintained the bank policy rate at 200% per annum despite a surge in annual inflation which reached 256.9% in July.
The bank policy rate had been hiked in June to 200% from 80% to curb speculative borrowing after annual inflation reached 191.7% in the month.
In a statement Monday after last week’s meeting of the RBZ’s Monetary Policy Committee (MPC), central bank chief John Mangudya said with month-on-month inflation having declined to 25.6% in July from 30.7% in June 2022, the committee noted that the progressive decline will continue in the outlook period as a result of the “tight monetary policy stance” being pursued by the bank.
“The MPC also noted that the disinflation trend will be reinforced by measures government was taking to deal with factors that destabilise the foreign exchange market, particularly by reviewing the basis and framework for payments to its suppliers of goods and services in its quest to stabilise the foreign exchange market and enhance value for money,” Mangudya said.
“The MPC further noted that whilst monthly inflation is expected to continue to decelerate during the outlook period, annual inflation will continue to increase up to September 2022 as a result of the lower base effect in 2021.”
The MPC also maintained the Medium Term Accommodation interest rate at 100% per annum. The minimum deposit rate for ZW$ savings was also maintained at 40% per annum so was the minimum rate for ZW$ time deposits at 80% per annum.
“In view of the said developments and outlook, the MPC resolved to maintain the interest rates at current levels,” Mangudya said.
He said the tight monetary policy stance would be buttressed by the favourable uptake of gold coins which were introduced in the economy on July 25 as an alternative stable financial product for store of value.
A total of 1500 gold coins were sold by the bank’s agents during the first week of their release into the market, with 85% having been bought in local currency and the balance of 15% in foreign currency, Mangudya said, adding that an additional 2000 gold coins will be released into the market during the week commencing August 1.