We won’t rush interest rate cut: RBZ

STAFF WRITER
The Reserve Bank of Zimbabwe (RBZ) says it will only adjust the policy rate when it is fully convinced that recent price-stability gains are durable, urging businesses to exercise patience despite growing calls for an immediate rate cut.
The caution comes after Zimbabwe recorded single-digit annual inflation for the first time in 29 years, a historic milestone widely viewed as a key anchor for durable macroeconomic stability and a foundation for sustainable growth.
Speaking during a State of the Economy and Outlook engagement in Bulawayo on Thursday, organised by Business Times in partnership with Africa Economic Development Strategies (AEDS), RBZ Deputy Governor Dr Innocent Matshe said while the inflation breakthrough is significant, monetary policy decisions will be driven by consistent data trends rather than a single positive reading.
Dr Matshe said the central bank would take a measured and cautious approach, informed by lessons from other global reserve banks.
“Now, we have just entered single-digit inflation. The question is, should we start adjusting the bank policy rate now? I know that is where companies want to go immediately,” he said.
“So, let me assure you that the bank will, in time, you know, give the signals of when it thinks it is prudent to do so because you do not immediately adjust because you have attained that.”
He stressed that policy decisions must be guided by sustained evidence to avoid unsettling markets and undermining confidence.
“It has to be durable enough. So you need more than one data point to respond,” Dr Matshe said.
“Because what you do not want is to react immediately and you reverse when things do not go well. That is dangerous because now you’re confusing business.”
The deputy governor noted that the current single-digit inflation environment is crucial for maintaining positive real interest rates — a key pillar for financial-sector confidence.
He said positive real rates are essential for value preservation, investment growth and overall financial stability, as they protect savings and support long-term capital formation.
Zimbabwe has registered a historic economic milestone, with annual inflation falling into single digits for the first time since 1997, effectively ending nearly three decades of persistent price instability and marking a major turning point in the country’s macroeconomic reform journey.
Backing the central bank’s stance, AEDS Executive Director Professor Gift Mugano said policy consistency was more important than short-term sentiment, warning against premature easing.
“In our view, we think the policy rate will remain unchanged throughout 2026,” Professor Mugano said.
“There is a need to entrench stability; it has to be staggered. It is not about how you feel, but it takes time.”