BUSINESS REPORTER
The central bank’s Monetary Policy Committee (MPC) has increased the bank’s policy rate by 20 percentage points to 60% with immediate effect and will tighten reserve money through reducing quarterly growth targets among a raft of measures to contain inflation.
The bank’s policy rate was last reviewed in February when it was increased to 40% from 35%.
The measures come after annual inflation rose for the second consecutive month to 54.5% in October from 51.5% in September.
Month-on-month inflation raced to 6.4% in October from 4.7% in September. Monetary authorities say the rise in inflation is driven mainly by the resurgence in the volatility of the parallel market exchange rate.
In a statement Thursday, Reserve Bank of Zimbabwe (RBZ) chief John Mangudya said the Medium Term Bank Accommodation Facility interest rate has also been increased to 40% from 30% with immediate effect.
The measure is expected to result in positive real interest rates which is critical to foster savings in the economy, he said.
The MPC further tightened the reserve money by reducing the quarterly growth in reserve money targets to 10% from 20% for the fourth quarter of 2021 and the first two quarters of 2022.
The decision to review the reserve money growth targets was informed by the reserve money growth outturn of 9.3% for the quarter ending September 30, Mangudya said.
Statutory reserve requirements for demand/call deposits have been doubled to 10%, while maintaining the rate at 2.5% for savings and time deposits.
The MPC increased minimum deposit rates for ZWL$ savings and time deposits to 7.5% and 20% per annum from 5% and 10% respectively with a view to promoting the appeal of the ZWL$ as an investment currency.
