- By Central Bank News
Zimbabwe’s central bank left its policy rate steady for the third time this year, saying there is still a need to maintain the current monetary policy stance that “has proven to be effective in combating inflation and fostering monetary stability in the economy.”
The Reserve Bank of Zimbabwe (RBZ) kept its policy rate for overnight accommodation at 40.0 percent, unchanged since February when it was raised by 500 basis points to tighten liquidity and control speculative borrowing.
In a statement released today following a meeting by the central bank’s monetary policy committee on Aug. 27, the bank said the committee noted with satisfaction the strong economic growth that is strengthened by the favorable global economic outlook and the US$961 million SDR allocation from the International Monetary Fund (IMF) on Aug. 23.
The Committee pointed to what it said was an “impressive performance” of foreign currency receipts, which rose 32 percent to US$5.09 billion as of Aug. 7 from the same period last year.
“The significant increase in foreign currency receipts is critical for sustaining the foreign exchange market and fostering exchange rate stability,” RBZ said.
Inflation in Zimbabwe has been decelerating since mid-2020 and fell to 50.24 percent in August from 837.5 percent in July last year.
In addition to maintaining its policy rate to sustain the current downward trajectory in inflation and support exchange rate stability, the central bank said it would also maintain the reserve monetary target at 20.0 percent to achieve a lower level of monetary expansion by year end.